Binance’s Billions are Backed, but You’re Probably Asking the Wrong Question
<p>Inthe wake of FTX’s spectacular collapse, amidst a hailstorm of fraud and mismanagement allegations, focus was naturally switched to the world’s largest surviving cryptocurrency exchange that was still standing— Binance.com.</p>
<p>Over the course of several days, a whopping US$6.4 billion worth of cryptocurrencies and stablecoins were withdrawn from Binance.com, more or less seamlessly, save for hiccups with respect to the stablecoin USDC, but otherwise, with little issue.</p>
<p>Binance.com’s ability to satisfy any withdrawals out of its exchange helped to assuage concerns over its solvency and that depositor assets were fully backed, leading to net inflows to the exchange in recent days.</p>
<p>But are investors and traders asking the right questions?</p>
<h2>Backed Against the Wall</h2>
<p>Since the first Tether (a dollar-denominated stablecoin) was minted, questions have been raised ever since about the true circumstances backing a stablecoin or cryptocurrency.</p>
<p>For an industry founded on the decentralized ethos of Bitcoin, that obsession with backing has always been somewhat peculiar — if the value of a cryptocurrency is its consensus mechanism (a shared agreement that the token is of value), then why this fixation with whether or not a token is backed?</p>
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