Leading cryptocurrency exchange Binance has acknowledged past problems in the management of the reserves used to back its Binance-peg Binance USD (BUSD) stablecoin, which at times led to more than $1 billion in missing collateral.

Bankrupt cryptocurrency lender Voyager Digital has received initial court approval for the proposed $1 billion sale of its assets to Binance.US, and said it will seek to expedite a U.S. national security review of the deal.

Cryptocurrency exchange Gemini has told clients in an email that it is terminating customer loan agreements with Genesis Global Capital as it shuts down its Earn program.

Top stories in the Crypto Roundup today:

• Binance Admits to Past Problems With BUSD Backing
• Voyager Gets Initial Approval for $1 Billion Binance.US Deal
• Gemini Terminates Earn Program

Binance Admits to Past Problems With BUSD Backing

Leading cryptocurrency exchange Binance has acknowledged past problems in the management of the reserves used to back its Binance-peg Binance USD (BUSD) stablecoin, which at times led to more than $1 billion in missing collateral.

According to Bloomberg, a Binance spokesperson signaled that the stablecoin’s peg had previously been strained, but is now intact. The spokesperson was quoted saying:

“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. Recently, the process has been much improved with enhanced discrepancy checks to ensure it’s always backed 1-1.”

The spokesperson added that “despite variances in the data, at no point were redemptions impacted for users.” Data compiled by Jonathan Reiter, co-founder of blockchain analytics firm ChainArgos, suggests BUSD was often undercollateralized between 2020 and 2021. On three occasions, the gap surpassed $1 billion.

Binance-peg BUSD, it’s worth noting, is a version of BUSD issued outside of the Ethereum network. It’s backed by BUSD purchased from Paxos, which is used to mint Binance-peg BUSD on other blockchains.

Reid’s analysis suggests that when minting Binance-peg BUSD, on the BNB Chain, new tokens were minted without the equivalent BUSD issued by Paxos on Ethereum being locked up.

BUSD is a stablecoin created by Paxos and Binance. The stablecoin is approved and regulated by the New York State Department of Financial Service and is currently the third-largest stablecoin on the market, behind USDT and USDC.

Voyager Gets Initial Approval for $1 Billion Binance.US Deal

Bankrupt cryptocurrency lender Voyager Digital has received initial court approval for the proposed $1 billion sale of its assets to Binance.US, and said it will seek to expedite a U.S. national security review of the deal.

U.S. bankruptcy judge Michael Wiles in New York, has given permission for Voyager to proceed with an agreement to sell assets to Binance.US and also seek approval from creditors for the sale. However, the sale will not be completed until it is approved in a later court hearing.

Voyager attorney Joshua Sussberg said during a court hearing that Voyager was responding to concerns raised by the U.S. Committee on Foreign Investment in the United States (CFIUS), adding:

"We are coordinating with Binance and their attorneys to not only deal with that inquiry, but to voluntarily submit an application to move this process along.”

Binance.US’s transaction includes a $20 million cash payment and an agreement to transfer Voyager’s customers to its exchange. Customers would then be able to withdraw their funds. The sale will allow customers to recover 51% of the value of their deposits at the time of Voyager’s bankruptcy filing.

If CFIUS blocks the transaction, Sussberg said, Voyager will have to repay customers with the crypto it has on hand, which would lead to a lower payout for users.

Gemini Terminates Earn Program

Cryptocurrency exchange Gemini has told clients in an email that it is terminating customer loan agreements with Genesis Global Capital as it shuts down its Earn program.

Gemini said it will prioritize the returning of customer funds and “operate with the utmost urgency.” In its email, existing redemption requests and Gemini’s capacity to seek a resolution to recover customer assets aren’t impacted by the loan agreement’s resolution.

The exchange said users should expect a minimum of two updates per weeks, on Tuesday and Friday, until a conclusion on the matter has been reached. Gemini halted redemptions on its lending product, Earn, which allowed users to generate as much as 8% in interest per year by lending out their tokens to Genesis Global Capital, one of the subsidiaries of Digital Currency Group, back in November.

The halt came after Genesis suspended redemptions and new loan originations at the lending unit because of its exposure to the collapsed cryptocurrency exchange FTX. Genesis has said it could take “weeks” to find a path forward, with bankruptcy being a possibility.

Cameron Winklevoss, one of the co-founders of the cryptocurrency trading platform, has accused the CEO of Digital Currency Group, Barry Silbert, of “bad faith stall tactics” and the intermingling of funds within his conglomerate that Winklevoss says left $900 million in customer assets in limbo.

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