Binance Faced Scrutiny After a User Raised Concerns About Unusual Onchain Activity

Reports estimated that Binance had liquidated 94% of its Bitcoin (BTC), 99.9% of Ethereum (ETH), and 99% of Solana in January.

Binance faced scrutiny after an exchange user, AB Kaui Dong, raised concerns about unusual onchain activity, suggesting that the exchange had sold a large portion of its Bitcoin (BTC) and Ethereum (ETH) by converting them into the stablecoin USDC.

According to Dong's analysis, Binance had liquidated 94% of its Bitcoin, 99.9% of Ethereum, and 99% of Solana in January.

However, Binance quickly denied these claims in an exchange post on February 11, stating that the movements were part of its routine treasury accounting process.

"Binance is not selling assets. This was simply an adjustment in the Binance treasury’s accounting process. User funds are SAFU, as always," the exchange noted.

Moreover, Binance highlighted that the assets in question were primarily past revenue of the exchange and not user funds. Following Binance's clarification, Dong also confirmed that the exchange appeared safe.

Binance's Proof of Reserves Shows Asset Adjustments

BNB exchange released its February proof of reserves, indicating adjustments in the excess cryptocurrency held by the exchange. The report showed that Binance had reduced its surplus holdings compared to January.

In January, Binance held an 8.15% surplus in Bitcoin and a 12.12% surplus in USDT. By February, these figures had declined to 0.45% and 1.01%, respectively.

Despite the reduction, Binance saw an increase in total deposits. With this, its Bitcoin holdings rose from 575,296 BTC in January to 615,816 BTC in February. Similarly, its USDT balance grew from 24.6 billion to 27.3 billion.

At the same time, the report highlighted that Binance converted most of its assets into USDC. However, BNB Coin saw the lowest reduction ratio, with only a 16.6% decrease.

The market conditions in January showed that most cryptocurrencies were at historical highs. This may have influenced Binance’s reserve management strategy.

Community Observes Large-Scale Asset Movements

The crypto community analyzed Binance’s proof of reserves and noticed changes in major holdings. Excess Ethereum reserves declined from 4.2% to zero, while USDC reserves increased from 32.32% to 41.28%.

Data from Arkham Intelligence indicated that Binance had moved a portion of its Bitcoin holdings. Given that USDT balances also dropped, some community members speculated—based on their observations—that Binance might have transferred these assets to other addresses rather than selling them.

$8 Billion in Crypto Transferred in One Month

Between January and February, Binance transferred approximately $8 billion worth of assets, including $4 Billion in Bitcoin, $3 Billion in USDT, and $700 Million in Ethereum.

The exact reason remains unclear. However, Binance maintains that the movements were part of its internal accounting processes, not an asset sell-off.

The exchange has reassured users that funds remain secure. Binance’s asset management strategies are still being closely observed, owing to increased criticism from the cryptocurrency community.

In this article, the views and opinions stated by the author or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.