6 ms·

Binance is fucked

86 points by dcawrey 4y ago

Sultanic 4y ago
This article sounds very desperate.
throw6383878 4y ago
Binance survived 2018 crypto crash. Stuff described in blog post happens every 10 months or so. If Binance crashes it will be part of bigger crash. Crypto is basically type of tech stock now.
- ggm 4y ago
  > Crypto is basically tech stock now I don't see Foxconn workers assembling bored apes, and I don't see ape wrangling genius bars in all the shopping centres. Crypto is basically not tech stock, ever.
  - lzauz 4y ago
    You cherrypicked examples where there's a physical element to the transaction. What exactly does WhatsApp assemble? Or where do I get customer service in person for WhatsApp?
    - kristianc 4y ago
      WhatsApp charges businesses for access to its API, and also has a payments platform in emerging markets. It assembles and sells software products.
    - prepend 4y ago
      Ads
    - pavlov 4y ago
      If WhatsApp disappeared today, over a billion people would lose their main communication channel with friends and families, and millions of businesses in emerging markets would lose a primary sales channel. If crypto disappeared today, what would be the real-world effect? How many people would be inconvenienced in some other sense than "bummer, I hoped this would make me rich"? How many actual businesses would be impacted?
      - JackFr 4y ago
        Well actually, you would throw a major wrench in the works of most ransomware operations. So there’s that.
      - yourapostasy 4y ago
        I've seen some concern voiced over counterparty risk in private credit contagion into public markets. Counterparty relationships are not uniformly visible across the financial landscape, so it is conceivable someone accepts a counterparty position on an instrument where crypto is pledged as an asset. This instrument is presented as a different asset obscuring the crypto, a tower of downstream instruments are constructed on top of that original instrument, and tranches leak out into a bunch of other more tradfi instruments. I've yet to see evidence that this is widespread in practice. Though admittedly there is a lot that can go on in private credit that is out of reach from public analytics. Even if there was contagion risk however, I don't expect extinction level financial system damage. Total global crypto valuation at peak was around $1T USD depending upon who you ask. Global software industry alone is around $10T USD. If crypto goes to zero tomorrow, it would be life-alterting to many people, but most of the world would go on about their lives. More value has been erased from global equity markets this year than any hypothetical crypto-to-zero scenario, and while the consequences won't be pleasant, in the developed world if you have saved up 1-7 years of living expenses you will barely notice the recession currently inbound.
- simplotek 4y ago
  > Crypto is basically tech stock now. I feel this is a self-serving cynical take that's in line with the pump-and-dump aspect of crypto: there's this despair in trying to portray all crypto as legitimate investments and businesses when they are all far from it.
- jefozabuss 4y ago
  Crypto is basically gambling, don't put in more money that you cannot afford to lose.
capableweb 4y ago
Unless I'm missing something, there is no actual evidence of "Binance being fucked" in the article other than their "stablecoin" (BUSD) having a lot of activity. Nothing like FTX or the other examples where the price quickly went to zero, and their setups generally being very messy with the hindsight that the mess was evident. And the conclusion of all the speculation is that "Binance is fucked", although there is no indicators (yet?) that that's true. What am I missing here?
- yesplorer 4y ago
  You haven’t missed anything. It’s exactly it. Someone is trying to get some cheap clicks.
  - ignoramous 4y ago
    > Someone is trying to get some cheap clicks. It isn't just that. The same network effects that propelled cryptocurrencies and exchanges to the moon are now facing its uglier side. It cuts both ways. There's a chance these currencies and exchanges emerge out of this boom-now-bust cycle stronger than before. Time will tell.
    - brookst 4y ago
      You’re on to something there. Finance is all about trends, and when to follow them versus when to bet against them. But crypto in particular seems subject to wild extremes of irrationality. It attracts people willing to to ignore fundamentals and move serious money based on faith and intuition.
      - JackFr 4y ago
        Finance is really about allocating capital to productive uses. Crypto sits on the border of greater-fool investing and Ponzi schemes.
        brookst 4y ago
nailer 4y ago
Thankfully Binance holds their customers' funds 1:1. Except USDC, which they've replaced with a different stablecoin BUSD, which is just like USDC except instead of trusting Circle, it trusts, er... Binance. Rate limited, so to reply to the gent from Paxos: I did check that out, but: > Binance-Peg BUSD, which is not issued by Paxos and is not regulated by NYDFS, is a separate product. Binance independently mints Binance-Peg BUSD on other blockchains (e.g., BNB Chain, Polygon and Avalanche) and pegs the tokens to BUSD on a one-to-one basis. This allows holders of both tokens to swap tokens between Ethereum and other blockchains. From https://paxos.com/busd/ https://paxos.com/busd/ Obviously even if one believes in BUSD, the matter of someone who trusted Circle having their coins transparently replaced with a different coin using a different trust model is concerning.
- elmalto 4y ago
  BUSD is a US New York DFS, the banking regulator, regulated stablecoin. USDC on the other hand is not regulated. Paxos (my employer) issues BUSD, not Binance
  - rippercushions 4y ago
    Nope, Binance also issues BUSD on its own "Binance Smart Chain" (BSC). Why you would trust this, and why it's called the same thing as the one on the Paxos chain, is beyond me. https://thefipharmacist.com/binance-peg-busd-vs-busd/ https://thefipharmacist.com/binance-peg-busd-vs-busd/
    - m00dy 4y ago
      That is true...Paxos only issues the token on Ethereum...I also asked the same question myself..What if binance issues more busd on his own ? I think CZ is under pressure as he has Chinese look (non-western) but major player in crypto which is something not okay for US or west in general. He knows this and it would be too stupid for him to issue arbitrary number of busd tokens to break 1-to-1 peg. edit: you can also take a look at bnb-chain's pegged token stats. https://github.com/bnb-chain/peg-token-stats/blob/master/2022/12/peggyTokenStats-16.csv https://github.com/bnb-chain/peg-token-stats/blob/master/202...
ianai 4y ago
Typo in the first bullet point “ exchnage”. Otherwise a pretty good piece. Misdirection is a huge red flag.
AstixAndBelix 4y ago
Why is it so difficult to just create an exchange that charges commissions and nothing more? Target the first 10-20 cryptos with a simple transparent platform and see the money rolling in with minimal risks of ending up naked
- swamp_cypress 4y ago
  Because someone else will come along and create an exchange that offers ponzi-like interest rates and run you of out of business. Also promising never to gamble with the depositors' funds etc
  - mtremsal 4y ago
    This is kind of Gresham's law for crypto. Bad ethics drive good ethics out of the market. Amusingly, this is often studied in the context of how deregulation led to the S&L crisis, i.e. a direct parallel.
- Traubenfuchs 4y ago
  Greed. They start like that, make a well oiled platform to swap cryptos, but then they think: Why not offer something more exciting? Why leave money on the streets? Even if it's risky.
- capableweb 4y ago
  This is essentially what Coinbase is. More like a old school bank (not modern) where your funds are "earmarked" for your account, rather than fucking around with lending it around to get some extra profits.
- nsaje 4y ago
  They're around, they just don't make it into the news. Example: Bitstamp https://www.bitstamp.net/ https://www.bitstamp.net/
- cool_dude85 4y ago
  Without having done much research, isn't that coinbase's market? Regardless, it costs money to actually comply with laws, do audits, all that, meanwhile you're losing out on a potentially huge revenue stream by not gambling customer funds. As long as things are going well, you'd expect the shady operators to be winning in the short term.
krona 4y ago
The big auditors don't even know what they are looking at and don't want to audit Binance. The CEO said as much on CNBC. Binance might not be fucked, but its impossible to know for sure, right now.
- ceejayoz 4y ago
  > The big auditors don't even know what they are looking at and don't want to audit Binance. The CEO said as much on CNBC. You take this claim at face value? It’s not that complex. Auditors untangle complex financial setups, that’s their job. They just balk at things like “Hidden, poorly internally labeled ‘fiat@’ account” on the balance sheets.
amelius 4y ago
> Binance Is Fucked > ... > could Binance be next?
jjoe 4y ago
I was hoping to see new information coming to light instead of a twitter rehash that's already been debunked. My opinion on this is that people are exploiting CZ's lack of training in corporate speak when handling pertinent questions. Media: What are your liabilities? CZ: We've never taken any loans so no liabilities besides customer deposits. We have PoR to show for that. Media: Are you sure? CZ: Yes, go ahead and ask around Media: He doesn't even have a handle on his own business. Off with his head!
- pavlov 4y ago
  Isn't this the same excuse that was always given about Bankman-Fried before the depth of his fraud became evident. "He's such an authentic guy, raw math genius, doesn't wear suits or know how to talk corporate bullshit."
5350-uiop-1130 4y ago
I was part of those withdrawals, had no issues, but precautions after FTX, luckily had no money there. This is all being stirred up by some crypto twitter "influencers", maybe engagement farming, who knows. This article does not have the substance to warrant being top of HN at time of writing.
- foogazi 4y ago
  > had no issues, but precautions after FTX That’s the issue Did you withdraw from all your other accounts or just Binance / crypto Once the true believers leave who replaces them ?
  - 5350-uiop-1130 4y ago
    just from Binance > Once the true believers leave who replaces them ? a new set of greater fools. if you follow crypto twitter you would see there is an almost endless supply. all it takes is a good month for BTC and everything would be forgotten, that's the casino world we are in right now.
_justinfunk 4y ago
It looks like people assumed Binance was in the same position as FTX, there was a run on Binance and they seemed to weather it just fine, perhaps they got lucky or perhaps they aren't committing fraud like SBF.
geeB 4y ago
There’s really no way to tell. If there is a hole and they broadcast that early, there will be a run and they are toast, so, like everyone else so far, they can only continue to service withdrawals until they no longer can. And up to that point, from the outside, things are identical with or without hole.
Reason077 4y ago
> "The Binance BUSD stablecoin..." How do people pronounce this? BUS-Dee? "Busty"? "Bus-ded"? "Busted"?
- stackola 4y ago
  I always thought of it as BEE-YOU_ES_DEE
  - JackFr 4y ago
    In the lead up to the financial crisis, sub-prime MBS deals always had series names like MLST-2006 11 or some such, based on the issuer (typically the initials of the special purpose vehicle), but I always believed the ones with pronounceable series like SALT or CBASS (especially clever) traded better. A stable coin prounounced “busty” would definitely be at an advantage with crypto bros.
geoelkh 4y ago
Anyone can explain "the bank is closed" thing? Any legitimacy to this or just CZ attempting to calm the crowd to stop the withdrawls?
alienalp 4y ago
As a result of rising interest rates they probably wanted to benefit from liquidity. Even though Paxos issues BUSD they most probably have some sort of agreement for sharing interest profit. There is nothing abnormal. In past exchanges closed withdrawals for longer time for various reasons. And most important CZ doesn't seem like on amphetamine.

86 points by dcawrey 4y ago

This article sounds very desperate.

Binance survived 2018 crypto crash. Stuff described in blog post happens every 10 months or so. If Binance crashes it will be part of bigger crash. Crypto is basically type of tech stock now.

ggm 4y ago
> Crypto is basically tech stock now I don't see Foxconn workers assembling bored apes, and I don't see ape wrangling genius bars in all the shopping centres. Crypto is basically not tech stock, ever.
- lzauz 4y ago
  You cherrypicked examples where there's a physical element to the transaction. What exactly does WhatsApp assemble? Or where do I get customer service in person for WhatsApp?
  - kristianc 4y ago
    WhatsApp charges businesses for access to its API, and also has a payments platform in emerging markets. It assembles and sells software products.
  - prepend 4y ago
    Ads
  - pavlov 4y ago
    If WhatsApp disappeared today, over a billion people would lose their main communication channel with friends and families, and millions of businesses in emerging markets would lose a primary sales channel. If crypto disappeared today, what would be the real-world effect? How many people would be inconvenienced in some other sense than "bummer, I hoped this would make me rich"? How many actual businesses would be impacted?
    - JackFr 4y ago
      Well actually, you would throw a major wrench in the works of most ransomware operations. So there’s that.
    - yourapostasy 4y ago
      I've seen some concern voiced over counterparty risk in private credit contagion into public markets. Counterparty relationships are not uniformly visible across the financial landscape, so it is conceivable someone accepts a counterparty position on an instrument where crypto is pledged as an asset. This instrument is presented as a different asset obscuring the crypto, a tower of downstream instruments are constructed on top of that original instrument, and tranches leak out into a bunch of other more tradfi instruments. I've yet to see evidence that this is widespread in practice. Though admittedly there is a lot that can go on in private credit that is out of reach from public analytics. Even if there was contagion risk however, I don't expect extinction level financial system damage. Total global crypto valuation at peak was around $1T USD depending upon who you ask. Global software industry alone is around $10T USD. If crypto goes to zero tomorrow, it would be life-alterting to many people, but most of the world would go on about their lives. More value has been erased from global equity markets this year than any hypothetical crypto-to-zero scenario, and while the consequences won't be pleasant, in the developed world if you have saved up 1-7 years of living expenses you will barely notice the recession currently inbound.
simplotek 4y ago
> Crypto is basically tech stock now. I feel this is a self-serving cynical take that's in line with the pump-and-dump aspect of crypto: there's this despair in trying to portray all crypto as legitimate investments and businesses when they are all far from it.
jefozabuss 4y ago
Crypto is basically gambling, don't put in more money that you cannot afford to lose.

capableweb 4y ago

Unless I'm missing something, there is no actual evidence of "Binance being fucked" in the article other than their "stablecoin" (BUSD) having a lot of activity. Nothing like FTX or the other examples where the price quickly went to zero, and their setups generally being very messy with the hindsight that the mess was evident. And the conclusion of all the speculation is that "Binance is fucked", although there is no indicators (yet?) that that's true. What am I missing here?

yesplorer 4y ago
You haven’t missed anything. It’s exactly it. Someone is trying to get some cheap clicks.
- ignoramous 4y ago
  > Someone is trying to get some cheap clicks. It isn't just that. The same network effects that propelled cryptocurrencies and exchanges to the moon are now facing its uglier side. It cuts both ways. There's a chance these currencies and exchanges emerge out of this boom-now-bust cycle stronger than before. Time will tell.
  - brookst 4y ago
    You’re on to something there. Finance is all about trends, and when to follow them versus when to bet against them. But crypto in particular seems subject to wild extremes of irrationality. It attracts people willing to to ignore fundamentals and move serious money based on faith and intuition.
    - JackFr 4y ago
      Finance is really about allocating capital to productive uses. Crypto sits on the border of greater-fool investing and Ponzi schemes.
      - brookst 4y ago

nailer 4y ago

Thankfully Binance holds their customers' funds 1:1. Except USDC, which they've replaced with a different stablecoin BUSD, which is just like USDC except instead of trusting Circle, it trusts, er... Binance. Rate limited, so to reply to the gent from Paxos: I did check that out, but: > Binance-Peg BUSD, which is not issued by Paxos and is not regulated by NYDFS, is a separate product. Binance independently mints Binance-Peg BUSD on other blockchains (e.g., BNB Chain, Polygon and Avalanche) and pegs the tokens to BUSD on a one-to-one basis. This allows holders of both tokens to swap tokens between Ethereum and other blockchains. From https://paxos.com/busd/ https://paxos.com/busd/ Obviously even if one believes in BUSD, the matter of someone who trusted Circle having their coins transparently replaced with a different coin using a different trust model is concerning.

elmalto 4y ago
BUSD is a US New York DFS, the banking regulator, regulated stablecoin. USDC on the other hand is not regulated. Paxos (my employer) issues BUSD, not Binance
- rippercushions 4y ago
  Nope, Binance also issues BUSD on its own "Binance Smart Chain" (BSC). Why you would trust this, and why it's called the same thing as the one on the Paxos chain, is beyond me. https://thefipharmacist.com/binance-peg-busd-vs-busd/ https://thefipharmacist.com/binance-peg-busd-vs-busd/
  - m00dy 4y ago
    That is true...Paxos only issues the token on Ethereum...I also asked the same question myself..What if binance issues more busd on his own ? I think CZ is under pressure as he has Chinese look (non-western) but major player in crypto which is something not okay for US or west in general. He knows this and it would be too stupid for him to issue arbitrary number of busd tokens to break 1-to-1 peg. edit: you can also take a look at bnb-chain's pegged token stats. https://github.com/bnb-chain/peg-token-stats/blob/master/2022/12/peggyTokenStats-16.csv https://github.com/bnb-chain/peg-token-stats/blob/master/202...

ianai 4y ago

Typo in the first bullet point “ exchnage”. Otherwise a pretty good piece. Misdirection is a huge red flag.

AstixAndBelix 4y ago

Why is it so difficult to just create an exchange that charges commissions and nothing more? Target the first 10-20 cryptos with a simple transparent platform and see the money rolling in with minimal risks of ending up naked

swamp_cypress 4y ago
Because someone else will come along and create an exchange that offers ponzi-like interest rates and run you of out of business. Also promising never to gamble with the depositors' funds etc
- mtremsal 4y ago
  This is kind of Gresham's law for crypto. Bad ethics drive good ethics out of the market. Amusingly, this is often studied in the context of how deregulation led to the S&L crisis, i.e. a direct parallel.
Traubenfuchs 4y ago
Greed. They start like that, make a well oiled platform to swap cryptos, but then they think: Why not offer something more exciting? Why leave money on the streets? Even if it's risky.
capableweb 4y ago
This is essentially what Coinbase is. More like a old school bank (not modern) where your funds are "earmarked" for your account, rather than fucking around with lending it around to get some extra profits.
nsaje 4y ago
They're around, they just don't make it into the news. Example: Bitstamp https://www.bitstamp.net/ https://www.bitstamp.net/
cool_dude85 4y ago
Without having done much research, isn't that coinbase's market? Regardless, it costs money to actually comply with laws, do audits, all that, meanwhile you're losing out on a potentially huge revenue stream by not gambling customer funds. As long as things are going well, you'd expect the shady operators to be winning in the short term.

krona 4y ago

The big auditors don't even know what they are looking at and don't want to audit Binance. The CEO said as much on CNBC. Binance might not be fucked, but its impossible to know for sure, right now.

ceejayoz 4y ago
> The big auditors don't even know what they are looking at and don't want to audit Binance. The CEO said as much on CNBC. You take this claim at face value? It’s not that complex. Auditors untangle complex financial setups, that’s their job. They just balk at things like “Hidden, poorly internally labeled ‘fiat@’ account” on the balance sheets.

amelius 4y ago

> Binance Is Fucked > ... > could Binance be next?

jjoe 4y ago

I was hoping to see new information coming to light instead of a twitter rehash that's already been debunked. My opinion on this is that people are exploiting CZ's lack of training in corporate speak when handling pertinent questions. Media: What are your liabilities? CZ: We've never taken any loans so no liabilities besides customer deposits. We have PoR to show for that. Media: Are you sure? CZ: Yes, go ahead and ask around Media: He doesn't even have a handle on his own business. Off with his head!

pavlov 4y ago
Isn't this the same excuse that was always given about Bankman-Fried before the depth of his fraud became evident. "He's such an authentic guy, raw math genius, doesn't wear suits or know how to talk corporate bullshit."

5350-uiop-1130 4y ago

I was part of those withdrawals, had no issues, but precautions after FTX, luckily had no money there. This is all being stirred up by some crypto twitter "influencers", maybe engagement farming, who knows. This article does not have the substance to warrant being top of HN at time of writing.

foogazi 4y ago
> had no issues, but precautions after FTX That’s the issue Did you withdraw from all your other accounts or just Binance / crypto Once the true believers leave who replaces them ?
- 5350-uiop-1130 4y ago
  just from Binance > Once the true believers leave who replaces them ? a new set of greater fools. if you follow crypto twitter you would see there is an almost endless supply. all it takes is a good month for BTC and everything would be forgotten, that's the casino world we are in right now.

_justinfunk 4y ago

It looks like people assumed Binance was in the same position as FTX, there was a run on Binance and they seemed to weather it just fine, perhaps they got lucky or perhaps they aren't committing fraud like SBF.

geeB 4y ago

There’s really no way to tell. If there is a hole and they broadcast that early, there will be a run and they are toast, so, like everyone else so far, they can only continue to service withdrawals until they no longer can. And up to that point, from the outside, things are identical with or without hole.

Reason077 4y ago

> "The Binance BUSD stablecoin..." How do people pronounce this? BUS-Dee? "Busty"? "Bus-ded"? "Busted"?

stackola 4y ago
I always thought of it as BEE-YOU_ES_DEE
- JackFr 4y ago
  In the lead up to the financial crisis, sub-prime MBS deals always had series names like MLST-2006 11 or some such, based on the issuer (typically the initials of the special purpose vehicle), but I always believed the ones with pronounceable series like SALT or CBASS (especially clever) traded better. A stable coin prounounced “busty” would definitely be at an advantage with crypto bros.

geoelkh 4y ago

Anyone can explain "the bank is closed" thing? Any legitimacy to this or just CZ attempting to calm the crowd to stop the withdrawls?

alienalp 4y ago

As a result of rising interest rates they probably wanted to benefit from liquidity. Even though Paxos issues BUSD they most probably have some sort of agreement for sharing interest profit. There is nothing abnormal. In past exchanges closed withdrawals for longer time for various reasons. And most important CZ doesn't seem like on amphetamine.