Late last year Forbes initiated an investigation into various transfers from Binance into various hedge funds between August 2022 to December 2022.
The main questions are, does Binance still have control of these funds, and could this end up the way of FTX?
With Binance essentially self-regulating until international and national laws are fully established with regard to the crypto industry, it is mainly down to trust that the big players are performing as well as they say they are and, more importantly, are as liquid as they say they are.
Records on blockchain show $1.2 billion of b-USDC being directed to Cumberland DRW, a crypto trading firm, with other collateral moving to Alameda, Justin Sun, and crypto services company Amber Group. The total amounted to $1.8 billion over five months.
Binance’s response has been lackluster, to say the least, with the b-USDC, a wrapped version of USDC on BNB Smart Chain not controlled by Circle, staying the same supply on-chain after.
What Does This Mean?
The worst-case scenario for this is that Binance fails to maintain backing for its BNB Smart Chain-wrapped assets, exposing its users to significant risk.
Some theories revolve around Binance loaning counterparties the funds backing various Smart Chain assets, in a similar vein to the dire financial practices that led to the downfall of FTX and the loss of billions of dollars of customer funds.
Time will tell if Changpeng Zhao will respond to this.
Ignoring The Doom And Gloom
With news such as this, it is essential to hedge bets and look at how the market will react. Currently, as hedge funds sit with empty accounts waiting to gain capital to reinject into the market, narratives are shifting, and AI technology is sitting at the forefront of the following bullish market movements, regardless of how hedge funds or exchanges may fall.
Avorak is one crypto starting to make waves in the space; with a full suite of machine-learning technologies applicable to both retail and commercial ventures, companies and personal investors alike are moving in. The revenue stream is set to begin in early 2024, with AVRK being the credit to use the Avorak products. A percentage of all revenue is set to be redistributed live to AVRK holders, a feat impossible with regular finance industry practices.
Jumping on this project in the early stages of its ICO will undoubtedly put a hedge against any issues Binance, Circle, or any of the hedge funds may have and will likely put most buyers at the top of the gainer’s lists when AI truly becomes the market-leading sector for investment.
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