Recently, an unknown accounting firm named Mazars did an audit on Binance's proof-of-reserves and proof-of-liabilities. Mazars concluded that Binance is overcollateralized. But according to professors from many schools, who all specialize in accounting, the audit by Mazars wasn't official and they did investors a disservice by comparing Binance's balances per public key address to the balance sheet strengths that independent banks, custodians, and depositories all have.

Some even considered the Binance audit report to be more worthless than an audit of Tether's reserves.

Knowing the strength of Binance's financials is important, especially when many people own Binance Coin (BNB), Binance's native blockchain token, similar to FTT for FTX, that allows users to do trades at a lower fee if they used the coins to buy the cryptos they want. If Binance is collapsing, we would see it unfold through the declining performance of BNB coin, like what we saw with FTT when FTX was collapsing.

Even if Binance is supposedly overcollateralized, the exchange is dealing with concerns that other crypto firms like Tether are currently dealing with. Concerns relating to allowing authoritarian nations to do business while evading sanctions and helping criminal organizations launder money. Binance's CEO CZ is even accused by the US of money laundering.

What Binance is being accused of could give them a fate that's no different than Tornado Cash. It's possible that Binance is helping fund the Putin war machine, which makes Binance a national security risk similar to that of Tornado Cash. Even if the article says that Binance is letting Russians use the platform, there's a strong chance that the majority of Russian Binance users are Kremlin financiers looking to help Russia buy drones from Iran, ammo from North Korea, and semiconductors from China.

Momentum is growing to ban Binance. To save itself, Binance is doing all it can to halt the mass withdrawals that it's currently dealing with. One way of doing this is to prevent users from withdrawing USDC stablecoin. When looking back and remembering the time when Binance stopped supporting trading for USDC, it makes more sense. If people are going to withdraw their coins from exchanges, Binance wants people to withdraw their money while holding BNB coin. That way, Binance will still have clients' money in its stablecoin.

Outside of halting withdrawals, Binance is offering users the opportunity to get in on their cloud mining opportunity (tweet). Cloud mining is basically where people mine crypto using rented cloud computing power. There are many failed cloud mining projects in the past and Binance's cloud mining project could fail too. In general, the current environment for crypto mining is very bad for physical miners and if they're struggling, what better chance do cloud miners have?

From violating the law and getting karma from the regulators to seeing massive withdrawals, things are getting desperate for Binance. And by being audited by an accounting firm known for being accused of fraud, misconduct, and malpractice on multiple occasions, it's hard to trust Mazers or the firm's partners when they say that Binance is overcollateralized. It's possible that Binance hired Mazers to manipulate the report and say those things to the public, considering that the CEO is someone who was suspended by the SEC for four years for improper conduct.

Binance could be linked to the Chinese Communist Party (CCP). Here's a video that explains more about it but it's worth noting considering that for FTX, one of their co-founders, Gary Wang, is suspected of working for the CCP (something I mostly hear from Marc Cohodes, a famous short seller). This will bring more urgency to nations around the world to investigate Binance. CZ's money laundering issues could be related to his close ties to the CCP.

If you're wondering how important Binance is to the crypto world and the ripple effects its collapse will bring, consider that Binance processes trades worth half of the entre crypto market's trading volume.