Binance Swiftly Converts USDC to BTC and ETH Amidst Silvergate Bank’s Collapse: Insights from PoR Analysis

Cryptocurrency giant Binance has unveiled its latest proof-of-reserves (PoRs) report on August 1, showcasing its commitment to transparency regarding its crypto holdings. However, the dynamics of its USDC reserves in the wake of Silvergate Bank’s demise have generated considerable interest and stirred discussions within the cryptocurrency community, particularly on the X platform (formerly known as Twitter).

The PoRs analysis offers a reassuring perspective on Binance’s financial health, indicating that the exchange possesses ample crypto assets and cash reserves to cover its users’ funds. According to the provided snapshot, Binance maintains a net balance-to-customer balance ratio of over 100% across all its assets.

While the report projects a robust financial status for Binance, the movements of its USDC reserves subsequent to Silvergate Bank’s collapse and the subsequent depegging of the stablecoin have been focal points of discourse. The PoR data illustrates that Binance’s USDC holdings dwindled from $3.4 billion on March 1 to $23.9 million by May 1.

Binance had initiated the internal conversion of customers’ USDC to Binance USD in September, while also retaining a substantial amount of USDC in its reserves. On-chain data indicates that shortly after Silvergate’s collapse on March 12, Binance embarked on a conversion spree, shifting its USDC reserves into Bitcoin and Ether.

Noted on-chain analyst Aleksandar Djakovic highlighted that between March 12 and May 1, Binance procured roughly 100,000 BTC and 550,000 ETH, amounting to approximately $3.5 billion — equivalent to the surplus of USDC held earlier.

At the time of writing, Binance had not responded to requests for comments from CryptoGrafos.

The revelation concerning Binance’s USDC maneuvers has ignited significant discussions, especially following a remark by Coinbase CEO Brian Armstrong during the company’s Q2 earnings call, suggesting that Binance had exchanged USDC for another stablecoin.

Proof-of-reserves reports have gained prominence within the cryptocurrency exchange landscape as a means to validate holdings and reinforce transparency, catalyzed by the collapse of FTX crypto exchange. The call for heightened transparency gained momentum following FTX’s downfall in November 2022, despite initial assertions by its founders about its robust financial position.

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