For the past week, a new wind of panic has been blowing on the forums of cryptocurrency holders. “I don’t know if these are rumors or not, but I prefer to withdraw my cryptocurrency”asserts a user. ” Enough is enough ! We no longer know who is safe or who is not…”adds another. « Binance.com sinking? ! », another desperate user is alarmed.
This is the question that torments the minds of owners of virtual currencies. Binance, the world’s leading cryptocurrency exchange, is the center of attention.
Binance, a platform in turmoil
Launched in 2017 in Hong Kong, Binance is the world’s largest platform for exchanging cryptocurrencies or virtual digital assets. On its website, investors can sell or buy bitcoin, ethereum or binance coin, the platform’s internal virtual currency. Its users can also store their assets in virtual wallets.
It is precisely this service that Internet users have been fleeing en masse for a week. In all, 6 billion dollars were repatriated in three days to accounts deemed safer by their owners. Behind this wave of withdrawals hides the fear of investors to relive a bankruptcy similar to that of FTX.
In November, this cryptocurrency exchange, the largest after Binance, went bankrupt. In its fall, it took with it some 100,000 customers who deposited their electronic tokens and capital on its site.
“The FTX case has caused distrustanalyzes Claire Balva »independent cryptocurrency consultant and formerly in charge of virtual assets for KPMG. “There is paranoia surrounding Binance’s health, but it’s not just that. »
According to American media, an investigation is underway in the United States on charges of money laundering and violation of international sanctions against Changpeng Zhao, the leader of the company. A complaint was also filed on December 14, 2022 by 15 French investors for “misleading commercial practice” et “concealment of fraud”. For several days, the cryptocurrency giant has been facing a host of negative signals.
A lack of transparency
The most important of these, however, remains the publication of a report by the audit firm Mazars on “evidence of reservations”, a kind of test to prove the solvency of Binance. If the report, intended mainly for internal use, does not show anything alarming, several observers have nevertheless expressed their concerns after its publication.
John Reed Stark, former director of the Internet office of the Securities and Exchanges Commission (SEC), the policeman of the American markets, declared in particular, Sunday, December 18: “The Binance Proof of Reserve Report does not address the implementation of internal financial controls, does not express a tangible opinion or conclusion, and does not guarantee numbers. I worked for over eighteen years at the SEC. This is what I define as a red flag. »
Following these reflections, Mazars declared that it is temporarily withdrawing from the cryptocurrency sector. In an email sent to the Bloomberg agency on Friday, December 16, the firm justifies its position by claiming to have « concerns about how these reports are understood by the public”.
This lack of information on the control practices put in place by Binance is however explained by the very nature of the report published by Mazars. “A “reserve proof” is not intended to audit these practices but to document the state of a company’s accounts at a given time”explains Claire Balva.
Investor fears, however, highlight the lack of financial information published by the platform. “We can’t be alarmed though.assures the consultant in virtual assets. We do not have solid information on a possible collapse of Binance. The problem is that we don’t have any to make sure he’s in good health either. »
The risk of a “domino effect” on crypto players
This is what worries cryptocurrency investors. For many economic observers, the bankruptcy of a company like Binance would be an earthquake in the still young virtual asset market. “The problem is Binance’s hegemonic position in this marketpoints to Claire Balva. In the event of bankruptcy, there would be a domino effect on many other players in the sector. »
In a financial market where prices are based on investor confidence in assets, the bankruptcy of this behemoth would also lead to the fall of several cryptocurrencies and in the first place that of bitcoin, already down nearly 6% for a week.
A localized crisis
However, this crisis would be contained. While there are more and more links between cryptocurrencies and more traditional markets, the failure of the former would have limited consequences for the latter. The market for virtual assets is only valued as of December 22 at 735 billion euros. By way of comparison, the CAC 40 weighs 2,145.68 billion euros and Apple nearly 2,035.83 billion euros.
“If everything collapses tomorrow, there will be consequences for jobs in companies in the sector and users of cryptocurrenciessummarizes Claire Balva. It will also affect some companies that have invested part of their cash in virtual assets, but that will be all. »
This is for example the case of MicroStrategy, a software company, which currently has 130,000 bitcoins, or more than 2 billion euros. But the choice of MicroStrategy remains an exception. The vast majority of institutions or companies that have invested in cryptocurrencies have only placed a tiny part of their capital, limiting the risks associated with this very fluctuating market.