Cryptocurrency exchange WhiteBIT has recently come under scrutiny due to allegations connecting the platform to Justin Sun and questionable interest rates on stablecoins. WhiteBIT has now issued an official response to address the controversies.
Earlier this week, an article surfaced making claims about WhiteBIT's high interest rates and alleged ties to Justin Sun. The report highlighted how WhiteBIT offers up to 24.8% interest on crypto deposits, almost five times higher than rates offered by US money markets. This sparked concerns given Sun's history of offering improbably high interest rates on stablecoins through platforms like USDD.
In their statement, WhiteBIT explains that the interest rates on their crypto lending products are reasonable when taking their business model into account. The customer deposits are used to fund margin trading on WhiteBIT's platform. The interest earned from margin traders covers the interest paid out to depositors.
They note that the average interest rate charged to margin traders is 28.47%, more than enough to support the ~23% interest paid to lenders. In contrast, platforms lacking adequate liquidity have resorted to increasing rates to abnormal levels to attract deposits. As proof of their sustainable model, WhiteBIT has been progressively decreasing rates over time rather than inflating them.
WhiteBIT also assures they do not share user account balances with any third parties, countering allegations about their reserves being connected to Sun. The exchange says the assumptions made based on their public wallet activity are circumstantial and do not reflect actual user balances.
Regarding connections to Justin Sun, WhiteBIT clarifies their ownership structure is publicly available knowledge. They operate as a organization with numerous shareholders. The platform acquired European licensing in 2019 before Sun's involvement with any sister platforms.
WhiteBIT speculates the accusations stem from competitors hoping to undermine their recent growth. They reiterated that they function as a registered and regulated business with strict compliance standards. The exchange expressed openness to addressing questions from reputable journalistic institutions directly through official communication channels.
The statement provides meaningful context around the recent rumors. WhiteBIT seems intent on dispelling fears around their stability by providing transparency. Still, the nature of the crypto industry means exchanges must continually earn users' trust through their actions. Savvy cryptocurrency traders will watch closely to see if WhiteBIT maintains the principles outlined in their response. However, they have taken a constructive first step by directly confronting the latest concerns rather than ignoring them.