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Binance’s Stablecoin Hasn’t Alway Been Fully Backed, Report Says

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Tue, 10/01/2023 - 19:06
Binance’s Stablecoin Hasn’t Alway Been Fully Backed, Report Says
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According to a recent Bloomberg report, Binance, the world’s largest cryptocurrency exchange by daily trading volumes, has acknowledged past issues in their handling of the Binance USD (BUSD) stablecoin.  

According to data compiled by blockchain analytics company ChainArgos and analyzed by Bloomberg, the gap between the stablecoin's reserves and its total supply topped $1 billion on three separate occasions.

Calling the process of maintaining a consistent $1 peg "challenging", a spokesperson for Binance noted that there had been significant improvements with regard to the management of the BUSD stablecoin. 

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They added that there had never been any impact on user redemptions and that no one else had been affected by this issue despite minor discrepancies appearing in the data.

Binance CEO Changpeng Zhao preemptively dismissed the Bloomberg report as "FUD" in a recent tweet while seemingly stressing that BNB remains in fourth place by market capitalization.          

The BUSD controversy is yet another case that further highlights the importance of proper asset management by stablecoin operators, especially as some of them trailblaze into new frontiers like algorithmic stability mechanisms.

The collapse of TerraUSD that took place last May serves as a stark reminder to stablecoin owners to stay vigilant.

It remains to be seen just how much mistrust this incident will sow amongst users, who depend on these issuers to maintain a measure of security against volatile crypto markets. 

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