Binance denies using client funds to earn profits

The cryptocurrency exchange Binance does not use funds staked in Dogecoin (DOGE) and Litecoin (LTC) to issue loans to third parties or for other profit‑driven purposes. The company said this to CoinDesk.

“LTC and DOGE are not used in on-chain staking, because they are tokens on blockchains with algorithms different from Proof-of-Stake. User funds remain with Binance; we apply a very strict risk-management approach to ensure their safety,” the statement says.

A company spokesperson also noted that the platform does not use these assets in lending operations, paying interest on deposits from its own treasury.

On July 19, Binance launched the “Locked Staking” program for tokens based on the Proof-of-Work consensus algorithm (PoW), which offers annual rewards of up to 3.1% for DOGE and up to 7% for LTC.

Since staking is technically not possible on the Dogecoin and Litecoin networks, some users believed that to pay deposit interest the exchange could use client funds in high-risk strategies, as Celsius Network did.

Some also noted that high deposit yields pose a risk to the platform’s stability, potentially leading to losses for clients’ funds.

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— Shibetoshi Nakamoto (@BillyM2k) July 19, 2022

The new program provides for a 120-day lock on assets. Clients may redeem early, but will not receive rewards.

Earlier, the U.S. Securities and Exchange Commission denied reports of an investigation into the BNB token.

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