Aug 08, 2023

How Silvergate Bank Collapse Affected Binance’s BTC and ETH USDC Sales

Crypto Market: Binance Sold USDC for BTC and ETH After Silvergate Bank Collapse - PoR Report
Binance sold USDC for BTC and ETH after Silvergate Bank collapse: PoR report

Crypto Exchange Binance Offers Transparency

Cryptocurrency exchange Binance released its latest proof-of-reserves (PoRs) on Aug. 1, offering transparency into its crypto reserves. This report revealed that Binance holds more than enough crypto and cash to cover user funds, with a ratio of Binance’s net balances to its customers’ net balances greater than 100%.

However, the movement of its USD Coin (USDC) reserves at the time of Silvergte’s collapse caught many people’s attention and became a topic of discussion on X (formerly Twitter). The PoR shows that Binance’s USDC balance decreased from $3.4 billion on March 1 to $23.9 million by May 1.

In order to keep up with the latest crypto trends, Binance started converting customer’s USDC to Binance USD in September. On-chain data suggests that right after Silvergate collapsed on March 12, Binance started converting its USDC reserves into Bitcoin (BTC) and Ether (ETH).

Binance’s USDC Reserves

On-chain analyst Aleksandar Djakovic recently noted that Binance had purchased approximately 100,000 BTC and 550,000 ETH between March 12 and May 1, amounting to around $3.5 billion, which is the same as the surplus of USDC held by the exchange. Binance did not respond to Cointelegraph’s requests for comment.

The discovery of Binance’s USDC reserves has become a major talking point, especially after Coinbase CEO Brian Armstrong made a comment during the company’s Q2 earnings call meeting that Binance had sold USDC for another stablecoin.

Proof of reserves (PoRs) have become a popular method for crypto exchanges to demonstrate their holdings to the public as a way of increasing transparency, following the collapse of the FTX crypto exchange. Calls for greater transparency in the crypto industry escalated after FTX became crippled, despite the founders claiming that its financial situation was sound until its collapse in November 2022.

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