The exchange’s USDC balance was reduced from $3.4 billion on March 1 to $23.9 million by May 1.
Cryptocurrency exchange Binance provided a closer look into its reserves with the August 1 release of its proof-of-reserves (PoR). The move of Binance to dump its USD Coin (USDC) reserves after the collapse of Sivergate Bank has become a major topic of discussion in crypto circles online, particularly on social media platform X.
Overall, the PoR report paints a picture of good financial health for the exchange. It shows that Binance has enough crypto and cash reserves to cover user funds. The report includes a snapshot of the ratios of Binance’s net balances to its customers’ net balances for cryptocurrencies Bitcoin, Ethereum, BNB, USDT, BUSD, USDC, Litecoin and XRP. The ratio of the exchange’s net balances to user net balances on all crypto assets shown is more than 100%.
A main point of discussion online is the movements of Binance’s USDC reserves following the collapse of crypto-friendly Silvegate Bank in March. The exchange’s USDC balance was reduced from $3.4 billion on March 1 to $23.9 million by May 1. Onchain data suggests that Binance started converting its USDC into Ether following Silvergate’s collapse. Onchain analyst Aleksandar Djakovic pointed out that between March 12 and May 1, Binance bought about 100,000 BTC and 550,000 ETH averaging about $3.5 billion, close to the amount of USDC the exchanged had in surplus on March 1.
The discourse surrounding Binance’s handling of its USDC holdings was furthered when Coinbase CEO Brian Armstrong stated in jest during the company’s Q2 earnings call that Binance had moved a chunk of their funds from USDC to another stablecoin.
“Binance actually moved some of their funds from USDC into another stablecoin. I think the data we have in the last six or seven weeks, I believe, that the USDC market cap is up net of that. And so that’s an important data point,” said he.
PoR has been an industry standard following the seemingly abrupt collapse of the crypto exchange FTX in November last year. Major exchanges began to share reserve audits with the public in an attempt to quell investors’ worries.