4. February 2023

• Major crypto exchange Binance initially pushed back against a Bloomberg report that its Binance-Peg BUSD stablecoin “doesn’t always appear to have been completely backed by BUSD”.
• Binance said the basis for the report was a “timing mismatch in backing Binance-Peg BUSD with BUSD”.
• The reported mismatch seemingly showed data in which the stablecoin was not fully backed at times.

Major crypto exchange Binance recently pushed back against a Bloomberg report that its Binance-Peg BUSD stablecoin “doesn’t always appear to have been completely backed by BUSD”. The news outlet reported that the Binance-peg BUSD was often undercollateralized between 2020 and 2021, a gap that sometimes exceeded $1 billion.

In response to the report, Binance released a blog post on Jan. 10 in which they stated that the basis for the report was a “timing mismatch in backing Binance-Peg BUSD with BUSD”. Despite the variances in the data, Binance clarified that at no point were redemptions impacted for users and that there was no impact to BUSD on ERC-20 issued by Paxos, which is regulated by the NYDFS, audited monthly and backed by USD cash and cash-equivalent reserves.

The reported mismatch seemingly showed data in which the stablecoin was not fully backed at times, however Binance restated that its BUSD stablecoin was “fully backed by USD cash and cash-equivalent reserves” and the Binance-Peg BUSD was fully backed by BUSD. Binance further clarified that there was never any impact to the redemptions of users and that the stablecoin is monitored closely to ensure it is always backed.

Overall, Binance responded to the Bloomberg report in an attempt to clear up any confusion users may have had in regards to the stablecoin’s collateralization. The exchange made sure to take into account any variances in the data and restated that BUSD was always fully backed by USD cash and cash-equivalent reserves. By doing so, Binance was able to ensure that users are never impacted and that the stablecoin is always backed.