Mainstream media has been on a crypto rampage this year following several high-profile company meltdowns. The Wall Street Journal has been at the forefront of some of those attacks.
Its latest attempt to deride the crypto industry has taken a swipe at Binance and its recently released proof of reserves.
Over the weekend, the outlet reported that it had consulted with accounting experts who said “investors still shouldn’t be satisfied with the report.”
Over the past month, Binance has been releasing data on its crypto wallet holdings, as reported by CryptoPotato. Furthermore, the firm claimed that deposits were backed 101%.
According to an accounting professor at Baruch College in New York, Douglas Carmichael, the report released by audit firm Mazars last week lacks information.
The WSJ also nitpicked at a Bitcoin price discrepancy that it claimed would make Binance reserves 97% collateralized, not 101% as the firm claimed.
Binance spokeswoman Jessica Jung told the outlet the difference of 21,860 BTCs was “made up of BTC loans made to customers through the Binance loan program,” adding that “the collateral for said loans are not in BTC but in other currencies.”
The audit report did not detail any of Binance’s internal controls or systems to liquidate assets to cover leveraged loans, according to other accounting experts. Former Financial Accounting Standards Board member, Hal Schroeder, commented:
“And we know in the U.S., even with all the good systems, banks have occasionally been caught off-guard. In light of what we’ve seen in the Bahamas, I don’t want to conclude that all the systems are that good.”
The audit also failed to disclose the name of Binance’s ultimate parent company but did confirm that Changpeng Zhao was the majority owner.
In its defense, Binance has a hefty “secure asset fund for users” (SAFU) which it recently topped up to $1 billion.
On Dec. 11, Wu Blockchain reported some suspicious trading patterns on Binance. It added that the activity may have been related to stolen API keys from 3commas.
Binance CEO Changpeng Zhao responded with reassurance that “this appears to be just market behavior.”