Binance CEO says customer funds fully backed on crypto exchange

Binance Holdings chief executive officer Changpeng ‘CZ’ Zhao downplayed concern about a recent wave of user redemptions from the world’s biggest cryptocurrency exchange, saying that customers could pull back all their funds without any problem if needed.

“People can withdraw 100 per cent of the assets they have on Binance, we will not have an issue in any given day,” Zhao said during an interview on CNBC Thursday.

He noted that Binance doesn’t operate on a fractional banking system, referring to the practice by large banks through which they are allowed to lend a proportion of their customers’ deposits to borrowers.

Crypto businesses should “hold user assets 1-to-1 and that is what we do.”

Digital asset platforms are facing a crisis in investor confidence following the swift collapse of Sam Bankman-Fried’s FTX exchange which was precipitated last month by a surge in withdrawals.

FTX’s rapid downfall has prompted some users to take control of their assets, leading to a jump in outflows across industry exchanges.

Binance was hit with about $1.14bn of net withdrawals on Tuesday, but the situation stabilised later in the week.

Many exchanges have looked to calm nerves by publishing partial views of their holdings, or so called “proof-of-reserves,” which fall short of full financial audits and have failed to convince investors.

Asked why his firm had not opted for a full financial audit, Zhao said many audit firms were wary of working with crypto businesses out of for fear of reputational damage. He added some did not know how to audit crypto exchanges.

Throughout the interview Zhao sought to distance his company’s practices from those of FTX, which authorities have alleged mishandled customer funds, using some to cover the bad debts of sister trading firm Alameda Research.

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