Reuters Report: Binance’s Books Paint A Shady Picture

Major questions have erupted recently over Binance’s handling of customer funds and its non-transparent books. Last week, Binane faced withdrawals to the tune of $6 billion in just 72 hours as investment sentiment towards the crypto exchange turned sour.

However, the crypto exchange had effectively handled the withdrawals while adding that its finance are solid and "we take our responsibility as a custodian seriously”.

Reuters, however, did a detailed analysis of Binance’s corporate filings while showing that the core of its business binance.com, which has processed trades worth $22 trillion last year, remains hidden from the public view.

The biggest question is that there’s no information on where the parent Binance group is based out of. As a result, it hasn’t disclosed some basic financial information like  revenue, profit and cash reserves.

Also, there’s no transparency on what role has its native crypto coin BNB to play on the company’s balance sheet. Binance doesn’t publish detailed financial reports since it’s not a public company, unlike it rival Coinbase.

Interestingly, Binance hasn’t even raised outside capital since 2018, which means it has never required to share financial information with external investors since then. The Reuters report states that Binance has been actively avoiding oversight.

However, Reuters has reviewed the filings by Binance units in 14 different jurisdictions where it holds regulatory licenses, authorizations, registrations, and approvals. The filings also show that these units present scant information about Binance’s business to authorities. The public filings also don’t show the flow of money between the units and the main Binance.com exchange.

Some former regulators and ex-Binance executives also say that the local businesses serve as a major window dressing for the major unregulated exchange. John Reed Stark, a former chief of the U.S. Securities and Exchange Commission's Office of Internet Enforcement told Reuters that Binance’s operations are more opaque than that of FTX’s.

He added: "They are co-opting the nomenclature of regulation to create a veneer of legitimacy. There is absolutely no transparency, no sunlight, no confirmation of any kind about its financial position.”

Binance Chief Strategy Officer Patrick Hillmann said that Reuters analysis of its filings across 14 jurisdictions is “categorically false”. He added: "The amount of corporate and financial information that has to be disclosed to regulators in those markets is immense, often requiring a six-month-long disclosure process. We are a private company and are not required to publicize our corporate finances”.