FTX might not have been the only crypto exchange using customer money for other things

Happy Friday eve, Opening Bell crew. Senior reporter Phil Rosen here.

As if the universe knew that I hadn't written a crypto newsletter in some time, here we go: Binance, the world's largest crypto exchange, has been under some scrutiny this week.

And the reasoning reminds me of what happened in the lead-up to the collapse of Sam Bankman-Fried's FTX, an event many consider the Lehman Brothers of crypto.

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1. With the initial reaction to FTX largely in the rearview mirror, crypto chatter in 2023 has mostly centered on the volatility seen across various tokens.

Bitcoin, the world's most popular token, jumped roughly 40% in January, though it made a measly 1% gain in February. Ether, meanwhile, climbed 31% in January, but also had a muted month following.

Yet digital asset happenings have become intriguing once again after Forbes reported this week that Binance used customer funds for its own purposes, in a similar way that FTX did.

The world's largest crypto exchange reportedly transferred nearly $1.8 billion in stablecoin collateral to hedge funds, the report said. Forbes concluded that over $1 billion of customer assets were left exposed and were not backed one-to-one as the exchange had previously stated.

Here's what a spokesperson from the exchange told Insider:

"Binance does not, and has never, invested or otherwise deployed user assets without consent under the terms of specific product. Binance holds all of its clients' assets in segregated accounts which are identified separately from any accounts used to hold assets belonging to Binance."

Any move by Binance to shuffle customer money around isn't exactly illegal, but the risks are apparent in the wake of the FTX disaster, part of which involved the exchange using customer money for making big bets via its affiliated trading arm.

Meanwhile, the Financial Times reported Wednesday that Binance's stablecoin, BUSD, suffered $6 billion in outflows in the month of February. It's the world's third largest stablecoin, and it's supposed to be pegged to the US dollar — but that one-to-one ratio is beginning to show signs of crumbling.

During a Twitter Spaces talk last month, chief executive Changpeng Zhao downplayed the ties between the exchange and its branded token.

"BUSD is not issued by Binance," he said. "We have an agreement to let [Paxos] use our brand, but that's not something that we created."

All this comes after another report said Binance had secret access to a bank account belonging to its ostensibly independent US partner.

That account, Reuters reported, was used to send $400 million to a trading firm managed by Zhao.

How confident are you in the cryptocurrency market and digital asset sector? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.

In other news:

2. US stock futures fall early Thursday and government bonds sell off, suggesting investors are bracing for a longer period of higher interest rates. Meanwhile, Tesla shares slide after Elon Musk falls short on detail at the much-anticipated investor day. Here are the latest market moves.

3. Earnings on deck: Broadcom, Costco, and Toronto-Dominion Bank, all reporting.

4. The chief investment strategist at a $540 billion firm thinks the stock market could have already bottomed for the year. Even as many experts are screaming "sell" over recent weeks, Wes Crill believes there's reason for optimism. Here's what he's most bullish on for 2023 and beyond.

5. Russia's ruble has crashed 20% as wartime costs pile up and energy revenues decline. The currency has been trading at roughly 75 rubles per dollar, the lowest mark in 10 months. In an effort to close budget deficits, Moscow has been selling its reserves of Chinese yuan.

6. Mortgage loan applications just hit their lowest level in 28 years. Data from the Mortgage Bankers Association released Wednesday showed housing demand is still getting beat down by higher rate expectations. Zillow and Redfin analysts told Insider they expect the US housing slump to deepen as the year progresses.

7. Artificial intelligence is on the brink of an "iPhone moment." Bank of America strategists see nascent technology adding trillions of dollars to the global economy. Given AI's commercial potential and ability to democratize data, they predict it will "revolutionize everything."

8. Navigating this year's stock market is going to be tricky. But this CIO of a top wealth-management firm shared six tips for investors looking to come out on top. Here's what you want to know.

9. Five market-beating fund managers gave their takes on how to take advantage of a comeback rally for foreign stocks. International stocks have outperformed in the last five months — and these are the smartest ways to profit from a long-term rally for once-forgotten names.

10. Novavax stock plunged after the COVID-19 vaccine maker said it had "substantial doubt" about its ability to stay in business. There's uncertainty over its revenue moving forward, and the biotech firm saw fourth-quarter losses twice as deep as expected. Get the full details.

Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com.

Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.