• Binance’s Binance smart chain BUSD has depegged several times.

  • The depegg resulted from a bug in Binance’s collateralization system.

  • Binance has reported that it has addressed the issue.

According to a recent report, cryptocurrency exchange Binance acknowledged on Tuesday that a bug in its system resulted in at least $1 billion in under-collateralization of BUSD, one of the company’s stablecoins reportedly backed one-to-one by the U.S. dollar.

The report citied analysis by Jonathan Reiter of blockchain analytics firm ChainArgos, stating that BUSD slipped from its peg by a large margin multiple times throughout 2021 and 2022.

“The process of maintaining the peg involves many teams and has not always been flawless, which may have resulted in operational delays in the past,” a Binance representative told Bloomberg.

While this may have caused operational delays in the past, until recently, this process “has been much improved with enhanced discrepancy checks to ensure it’s always 1-1 pegged,” the representative added.

The spokesman did not specify how long Binance-peg BUSD was undercollateralized or when Binance found and addressed the problem but highlighted that user redemptions were never affected.

Reiter, along with Patrick Tan of the blockchain analytics company ChainArgos collected and analyzed data that show ...

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