A new report says that Binance mishandled $1.8 billion in customer funds in 2022

According to a new report from Forbes, Binance mishandled $1.8 billion in customer funds in 2022. This is not the first report indicating that Binance mixed customer funds with company funds.

The new report notes that between August 2022 and the end of the year, Binance transferred $1.8 billion in customer funds that were supposed to support its stablecoin. Customers were not told of the move, and the transfers were made at a time when the cryptocurrency markets were reeling from the FTX debacle.

More heat for Binance

Stablecoins have come under fire in 2023, as central banks prepare to roll out central bank digital currencies (CBDCs). As an alternative to fiat currency, stablecoins are a clear contender for CBDC market share.

While most stablecoins use fiat assets to embed tokens, there is no industry standard, and users are left to decide if they are comfortable with the amount of transparency they have from the stablecoin issuer.

In this case, Binance moved funds that were supposed to support the value of B-peg USDC Tokens, a stablecoin pegged to the value of the US dollar. When the collateral was transferred, the tokens were essentially unsupported, which had to be disclosed to customers.

The majority of the money was sent to high-frequency trading company Cumberland, with $1.1 billion sent according to the report. The rest of the money went to the now-defunct Alameda Research, as well as Tron. There has been no impact on Binance yet, but this is not the first time that Binance has admitted mixing company funds with customer funds.

Earlier this year, Binance revealed that it had mixed funds between companies and customers in the same wallet, which presented the risk of holding the money in the exchange. Customers were not told of the practice at the time, which drew criticism from many in the crypto community.