Changpeng Zhao refutes rumors of liquidity problems at Binance

The cryptocurrency exchange Binance has sufficient liquidity to allow all clients to withdraw 100% of their assets if necessary. This was stated by the company’s CEO Changpeng Zhao, according to Bloomberg.

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\”People can withdraw 100% of the assets they have on Binance. We won\’t have problems on any given day,\” he told CNBC.

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Zhao\’s words came in response to community concerns about the recent outflow of funds from the platform.

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According to the head of Binance, the exchange does not operate under a fractional-reserve banking model, where a lending institution holds only a portion of deposits on the platform. He emphasised that users\’ assets are backed one-to-one.

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Zhao explained that the company had not conducted a full financial audit, as many auditors are wary of working with cryptocurrencies, and some do not know how to study the activities of cryptocurrency exchanges.

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Earlier, a number of experts warned of alarm signals in Mazars\’ report on Binance\’s reserves. In particular, analysts questioned the reliability of the exchange\’s liquidation systems, which are needed to cover margin requirements, and noted the lack of transparency in its corporate structure.

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According to The Block, Zhao also clarified the situation with the restriction on withdrawing the stablecoin USD Coin (USDC) in certain networks. He said the problem was tied to a New York bank Binance uses to exchange Binance USD (BUSD) for USDC — at the time the institution was not operating.

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\”We have the assets needed for conversion. There is no margin, no leverage; we simply needed the banks to open. When they are closed, and you are trying to withdraw money, it does not work,\” he said.

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The head of the company also stated that Binance has no problematic venture investments, owes no one money, and is not a creditor with unpaid liabilities.

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Earlier, U.S. Senator Bill Hagerty of the Republican Party said Binance had close ties with the Chinese government. In a discussion with ForkLog, a company representative described his data as “inaccurate” and stressed that the exchange is in a very strong financial position.

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