. Binance Converts $1B Fund into Cryptocurrencies - 04 April 2023

Binance Converts $1B Fund into Cryptocurrencies – 04 April 2023

Binance Converts $1B Fund into Cryptocurrencies – 04 April 2023

binance coin
  • Binance, the world’s largest cryptocurrency exchange, announced that it will convert a fund containing almost $1 billion in reserves into various digital currencies, including Bitcoin, Ethereum, and its native token BNB.
  • The move caused prices of these cryptocurrencies to rise, but concerns remain over increased U.S. scrutiny of Binance’s operations. The fund was initially earmarked to support troubled but viable crypto enterprises affected by the collapse of FTX in November, which Binance triggered by pulling the plug.
  • However, Binance has not closed any significant support deals since the beginning of the year. The recent failures of three major institutions that facilitated money flows between fiat currency and cryptocurrencies – Silicon Valley Bank, Signature Bank, and Silvergate Capital – caused panic in crypto circles, triggering the selling of tokens deemed at risk.
  • The collapse of these institutions made it harder for Binance to operate in the U.S., where regulatory scrutiny has increased sharply since the FTX collapse.
  • Internal Binance documents leaked in February showed that Binance’s offshore parent had effective control over its U.S. operations, a claim that Binance’s founder and CEO, Changpeng Zhao, has repeatedly denied.
  • Binance’s decision to convert the recovery initiative fund into digital currencies was styled as a vote of confidence in crypto and an exercise in transparency.
  • However, some observers drew parallels with a move by Do Kwon, the founder of the ill-fated Terra/Luna stablecoin network, who transferred cash reserves into Bitcoin shortly before it collapsed last May. Binance’s move also coincided with a sense of relief in the crypto market after the Federal Reserve indicated that it would honor all deposits – not just federally insured ones – after taking over Silicon Valley Bank, which had $3.3 billion of reserves backing USD Coin.

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