Binance is still operating normally despite months of FUD

Toward the end of 2022, the market saw some FUD (fear, uncertainty, and doubt) about Binance, one of the world's largest and most popular cryptocurrency exchanges.

Concerns arose from a variety of sources, including social media posts and internet articles, which raised questions about the exchange's security and the likelihood of customer cash being compromised.

Let's take a closer look at these latest worries, study the audit reports that have been issued, and explain why the FUD is unfounded and Binance is safe.

Summary of the Concerns

A succession of social media posts and internet publications claiming that the exchange is not safe and that user funds are at risk has been one of the concerns surrounding Binance.

Various events, like the Celcius bankruptcy, the high-profile fall of FTX, temporary withdrawal pauses, and the recent increase of phishing attacks targeting cryptocurrency exchanges, have exacerbated these assertions.

Despite these reservations, it is crucial to remember that Binance has a long history of security and has taken several precautions to safeguard the safety of its customers' assets. For example, the exchange keeps the majority of its users' assets in offline cold storage wallets, which are not connected to the internet and are therefore less vulnerable to hacker assaults.

Binance has also introduced additional security measures, including as multi-factor authentication, to protect users' cash. We'll go over some of the issues in greater depth below.

Proof-of-Reserves

Following the demise of many platforms in 2022, the public got more interested in viewing proof-of-reserves from exchanges to evaluate whether they have the 1:1 backing of the assets offered. Binance was audited by Mazars in December 2022, and the report revealed that Binance's Bitcoin (BTC) reserves exceeded 100%.

However, there were some reservations because the platform's obligations were not covered. Former Kraken CEO Jesse Powell questioned the audit in November, arguing that it was insufficient because it did not cover the negative balances. Binance CEO Chenpang Zhao (CZ) later revealed that in December 2022, the exchange had no outstanding loans.

Pausing USDC withdrawals

Binance temporarily ceased withdrawing USD Coin (USDC) tokens from the platform on December 13th, 2022. Since Celcius halted withdrawals shortly before its bankruptcy in July 2022, investors were apprehensive. Furthermore, BlockFi suspended withdrawals before to its demise, with bankruptcy proceedings beginning in early January 2023.

However, withdrawals on Binance have been suspended due to a token swap involving USDC, according to a Twitter announcement.

In this case, it appears to be a case of unfortunate timing, owing to the collapse of the popular FTX platform a month before. Withdrawals for the Tether (USDT) and Binance Coin (BNB) stablecoins were also not restricted during this time. Binance was also able to withstand a significant rise in user withdrawals.

Within 24 hours of the suspension of USDC withdrawals, approximately to $2 billion in Ethereum tokens were removed from the network. Chenpang Zhao (CZ) even praised the massive withdrawals, stating he thought it was a good sign.

“it's a good idea to stress test withdrawals on each CEX in turn.”

Binance has lately seen up to $12 billion in withdrawals in the last two months, as the crypto exchange has continued to weather a huge volume of withdrawals. Despite the high volume of withdrawals, Binance has continued to operate normally.

Phishing

The rise of phishing attempts targeting all large exchanges has been another cause of FUD around Binance. Phishing attacks are a common strategy used by hackers to mislead users into disclosing their login credentials or other sensitive information by impersonating a legitimate firm or individual.

In the case of Binance, hackers have put up phony applications, websites, or social media pages purporting to be linked with the exchange and utilized these to deceive users into disclosing their login credentials.

While phishing attempts can be a serious threat to any online service, it is crucial to note that Binance has taken many precautions to safeguard its consumers from such assaults.

For example, the exchange has introduced email and SMS authentication for login attempts, established a dedicated security team to monitor phishing assaults, and issued a number of cautions and advice to assist users in protecting themselves.

In closing

While there have been some recent concerns about Binance's safety and security, it's crucial to remember that the exchange has continued to operate normally.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!