Binance Swapped USDC for BTC or ETH After Silvergate Bank Collapse: PoR Report
Binance’s declining USDC reserves have become a hot topic in the crypto community, especially since Coinbase’s CEO commented on the company’s Q2 earnings announcement.
Binance, a cryptocurrency exchange, has released their latest Proofs of Reserves (PoRs), which provide transparency about their crypto reserves. The movement of Binance’s USD Coin (USDC) at the time of Silvergte’s collapse caught the attention of many and was a topic on X (formerly Twitter).
According to the latest Binance Reserves audit, there are more than enough cryptocurrencies and cash to cover all user funds. As shown below, the ratio between Binance’s net worth and its clients’ net worth is more than 100%.
Binance asset reserve ratio to customer deposits. Source: Binance.
Although the report shows a healthy financial position of Binance’s USDC reserves, the discussion focused on the move of USDC reserves to Silvergate and the stablecoin’s annulment. According to PoR, Binance’s USDC account dropped from $3.4 billion on March 1 to $23.9 million on May 1.
Binance reserves between December 2022 and June 2023. Binance
Binance started converting USDC from customers to Binance USD internally in September, but also held a large amount of USDC at the time. On-chain data suggests that Binance converted its USDC reserves into Bitcoin (BTC) and Ether (ETH) following the collapse of Silvergate on March 12. Aleksandar Djakovic, a Twitter on-chain expert, noted that Binance bought around 100,000 BTC and 500,000 ETH between March 12 and May 1, totaling $3.5 billion. That’s the same amount I had in USDC. Binance did not respond to AskFX at the time of writing.
Binance’s USDC reserve has become a hot topic, especially since Coinbase CEO Brian Armstrong joked during the company’s second-quarter earnings conference call that Binance sold USDC in exchange for another stablecoin.
PoRs are a popular method for crypto exchanges looking to share their holdings with the public. This is a consequence of the collapse of FTX. After FTX collapsed in November 2022, the crypto community started calling for more transparency. Although the founders claimed that the financial situation had been balanced by then, the company faltered.
