• Thu. Jul 4th, 2024

Will this “worrying” Binance’s proof of reserves crash BNB further?

  • Binance has been criticised for the quality of its proof of reserves

  • Mazars say the crypto exchange is 97% collateralised

  • BNB trades down and could find support at $266

The collapse of FTX brought a lot of caution around centralised exchanges. The collapse perhaps underlined the idea that no exchange was too big to fail. FTX was the second-largest exchange, valued at least $30 billion by early November. Two weeks later, FTX was under the bridge. Investors now feel exchanges need further scrutiny, especially regarding their proof of reserves.

Binance Coin (BNB/USD) was among the exchanges to emphasise the idea of proof of reserves. However, an audit report by Mazars shows there are questions about Binance’s report on its reserves. The auditor says the report lacks information showing the quality of Binance’s internal controls. That includes the system for liquidating assets to protect margin loans.

Mazars says there are discrepancies in total Bitcoin liabilities. According to the auditor, Binance is 97% collateralised, missing the 1:1 ratio threshold. The collateral excludes out-of-scope assets in loan and margin accounts. Binance’s long-standing concerns of opaque operations are also raised in Mazars report.

Not only Mazars has raised questions on Binance’s proof of reserves. A renowned accounting professor and former chief auditor of US PCAOB also says Binance’s reserves raise red flags. Douglas Carmichael says Binance reserves fail to answer all the investor’s questions on collateralisation.

The recent comments and queries on Binance’s proof of reserves will surely be a concern. As the world’s largest crypto exchange, a collapse could be catastrophic. The further confidence hit could slam BNB, although other macro factors are also at play.

BNB slides as momentum weakens

BNB/USD Chart by TradingView

A technical outlook shows BNB on a decline. The MACD indicator is shifting to bear territory and shows momentum is weakening for the cryptocurrency. The next potential level for BNB is $266.

What to watch next for BNB?

The scrutiny of Binance’s reserves could weigh on price, at least in the short term. However, the US inflation report and the Fed’s policy action are events to watch as the BNB price slides to $266.

Where to buy BNB

eToro

eToro is a global social investment brokerage company which offers over 75 cryptocurrencies to invest in.

It offers crypto trading commission-free and users on the platform have the option to manually invest or socially invest.

eToro even has a unique CopyTrader system which allows users to automatically copy the trades of popular investors.


Buy BNB with eToro today

Capital.com

Capital.com is a global broker which offers over 200 cryptocurrencies for its users.

It comes with a range of features such as; great security, 24/7 support, demo accounts and a wide variety of assets.

On top of that, it also has no inactivity, withdrawal or deposit fees, which makes it stand out from other crypto brands.


Buy BNB with Capital.com today

The post Will this “worrying” Binance’s proof of reserves crash BNB further? appeared first on CoinJournal.