Cryptocurrency exchange Binance has acknowledged that binance USD (BUSD) wasn't always backed in the past as concerns about the exchange's solvency still remain.
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In a commentary to Bloomberg, a spokesperson for Binance said that the process of maintaining the backing "involves many teams and has not always been flawless, which may have resulted in operational delays in the past." However, the process has been improved since then with "enhanced discrepancy checks to ensure it’s always backed 1-1."
As per data from ChainArgos, Binance's BUSD was often undercollateralized between 2020 and 2021. The research conducted by the platform indicates that at least three times the gap between BUSD's reserves and supply surpassed $1 billion.
Meanwhile, American hedge funds are under regulatory scrutiny as US federal prosecutors want to examine their ties to Binance as part of the ongoing investigation over alleged violations of money-laundering rules.
The US attorney's office for the Western District of Washington in Seattle reached out to several US-based investment firms and requested them to hand over records of their contacts with Binance.
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