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Why does it keep referring to Binance.us as a trick or ploy? It is the only way to use Binance for investors in the USA. Like most exchanges long ago they kic

Why does it keep referring to Binance.us as a trick or ploy? It is the only way to use Binance for investors in the USA. Like most exchanges long ago they kicked all the USA based people off. Then exchanges were created that fulfilled USA regulations and rules. Typically coins that could be securities aren’t included. Exchanges like Binance.us, FTX.us were created. Americans without a VPN haven’t been able to use exchanges Bitmex, Binance.com, FTX.com etc. for a long time. This isn’t a ploy or trick any more than a separate website for GDPR countries is a trick.

jacquesm 4y ago
Any examples of those separate websites for GDPR countries? The thing I most frequently come across is companies that more or less outright admit that without tracking their users they can not make the numbers work or that they refuse to abide by the law and so they block EU citizens outright.
- kasey_junk 4y ago
  Nit: blocking EU citizens is not refusing to abide by the law. It’s one of several perfectly valid compliance approaches.
Gwypaas 4y ago
Because they are not keeping your money/stocks/tokens/whatever like they promised and should. Like all real brokers do. A bank run can not happen for a broker. It is like Vanguard sending your money to their hypothetical Chinese subsidiary because that is where they think the market is most efficient. Then when the Chinese government seizes that company's accounts, you are shit out of luck because your money is not where it is supposed to be, and the US entity is bankrupt.
- pooper 4y ago
  The whole concept makes no sense for me. If someone deposits cash, don't offer any interest. Keep it as cash (or something backed by the US dollar). I can give Vanguard USD 5000 and feel safe thinking I can buy VTSAX anytime. This is all these exchanges need to do. Just execute lots of trades and you will make a few pennies every time. Why is it so difficult?
  - DebtDeflation 4y ago
    Because >90% of crypto exchange volume is just fake wash trades that don't generate fees for the exchange. SBF laid out in detail how crypto exchanges actually make money back in an April interview: https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
    - gruez 4y ago
      >SBF laid out in detail how crypto exchanges actually make money back in an April interview: >https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm... "exchange" is mentioned exactly zero times in the article. However, I'll let that slide as presumably you meant to imply that exchanges make money through yield farming, which also doesn't make sense because yield farming doesn't involve the participation of exchanges at all. As mentioned in the article, the concept is that a smart contract accepts deposits and hands out tokens, which constitute the yield. No part of that requires exchanges.
      - DebtDeflation 4y ago
        You seem to be under the impression that a crypto exchange is like a modern day stock or commodities exchange. It is not. It's much more akin to a hybrid of an 1860's era wildcat bank and a 1900's era bucket shop. Their main business is NOT executing crypto trades on behalf of customers no matter what they might say.
        Mistletoe 4y ago
        You really need to provide some citations. The fees are actually extremely lucrative, check the Coinbase filings during the bull run. The FTX trading fees were massive as well and is one of the reasons SBF is a profound idiot. He could have banked those fees forever but he wanted more and more gains so went to the dark side trading and using user funds and of course losing them. > The (FTX) crypto exchange's revenue soared more than 1,000% from $89 million to $1.02 billion in 2021.
- rileymat2 4y ago
  Not exactly, you should dig deeper, many brokers do use your shares. If you agree to it… and you very well could have not reading fine print. “To be clear, your brokerage firm cannot lend out your stocks without your permission. However, you may have signed a customer agreement that explicitly allows your broker to lend out your securities. This clause is often tucked deep within the customer agreement, and few investors pay much attention to it.” https://www.sonnlaw.com/faq/can-my-broker-lend-my-shares/ https://www.sonnlaw.com/faq/can-my-broker-lend-my-shares/
  - kasey_junk 4y ago
    Those shares would still list you as the beneficial owner at Cede though so if the broker becomes insolvent (perhaps due to counterparty risk from short sellers) your shares are not available to other creditors and continue to be yours.
chessgecko 4y ago
The trick is that they pretended they were compliant with us regulations when they weren’t. Some users probably don’t mind this, but if there are issues they might change their mind.
ZeroGravitas 4y ago
Imagine you set up a seperate GDPR compliant site to keep the regulators happy, then behind the scenes transferred the customer info to the standard site and just continued to do all the stuff the GDPR tells you not to. Thats what they are alleging here, and why the supposedly seperate company is just a trick.
Sakos 4y ago
Did you read the post at all? > Binance.US was described as a separate entity from Binance that was merely licensing the name and certain features from the main company. > In public, Zhao said the new U.S. exchange – called Binance.US – was a “fully independent entity.” In reality, Zhao controlled Binance.US, directing its management from abroad, according to regulatory filings from 2020, company messages and interviews with former team members. An adviser, in a message to Binance executives, described the U.S. exchange as a “de facto subsidiary.” > These public issues have led many to wonder whether Binance and Binance.US are truly separate entities. We can now report that based on blockchain transfers, market data, and company disclosures, it appears that there is no meaningful separation between the two firms. In fact, we show that Binance.US both transfers customer deposits to Binance and pays customer withdrawals using transfers back from the offshore exchange’s wallets. Further, we demonstrate that trades allegedly happening on Binance.US’s exchange are likely being conducted directly on the main Binance exchange. > It turned out that Binance US apparently didn’t have enough USDT in its wallets to pay back customers for several hours. > However, Binance.US apparently had to pull money from the main Binance exchange to pay back customer withdrawals. In other words, Binance.US customers were paid back using funds transferred from the offshore Binance exchange! We must ask, why were U.S. customer assets held in Binance addresses? > We conclude that a significant portion of Binance.US customer deposits are commingled with other deposits on Binance’s main exchange. > Our data suggest that Binance.US’s “market maker” is a single pair of addresses that exclusively transfer funds between Binance and Binance.US. These addresses move customer assets from the U.S.-based exchange to the much larger offshore entity to perform trades. This means that for all practical purposes, there is no real difference between having your money with Binance.US or directly with Binance. Given that Binance was barred from doing business in the United States, it certainly appears that Binance.US is little more than a convenient fiction to evade regulators. > In reality, Binance.US appears to be little more than a facade to obfuscate the fact that an unregulated offshore crypto business currently under investigation for money laundering and sanctions violations is doing business in the United States despite being banned from the country. The post explains quite clearly why they call it a trick. If I use Vanguard in the US, it is a completely separate entity from Vanguard in Europe. This is to ensure they meet the regulations of where they're operating. This is standard operating procedure. What Binance is doing is not.
piva00 4y ago
> This isn’t a ploy or trick any more than a separate website for GDPR countries is a trick. If the EU citizens data is sneakily transferred out of jurisdiction and used without consent it's a trick and illegal by the GDPR.

jacquesm 4y ago

Any examples of those separate websites for GDPR countries? The thing I most frequently come across is companies that more or less outright admit that without tracking their users they can not make the numbers work or that they refuse to abide by the law and so they block EU citizens outright.

kasey_junk 4y ago
Nit: blocking EU citizens is not refusing to abide by the law. It’s one of several perfectly valid compliance approaches.

Gwypaas 4y ago

Because they are not keeping your money/stocks/tokens/whatever like they promised and should. Like all real brokers do. A bank run can not happen for a broker. It is like Vanguard sending your money to their hypothetical Chinese subsidiary because that is where they think the market is most efficient. Then when the Chinese government seizes that company's accounts, you are shit out of luck because your money is not where it is supposed to be, and the US entity is bankrupt.

pooper 4y ago
The whole concept makes no sense for me. If someone deposits cash, don't offer any interest. Keep it as cash (or something backed by the US dollar). I can give Vanguard USD 5000 and feel safe thinking I can buy VTSAX anytime. This is all these exchanges need to do. Just execute lots of trades and you will make a few pennies every time. Why is it so difficult?
- DebtDeflation 4y ago
  Because >90% of crypto exchange volume is just fake wash trades that don't generate fees for the exchange. SBF laid out in detail how crypto exchanges actually make money back in an April interview: https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
  - gruez 4y ago
    >SBF laid out in detail how crypto exchanges actually make money back in an April interview: >https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm... "exchange" is mentioned exactly zero times in the article. However, I'll let that slide as presumably you meant to imply that exchanges make money through yield farming, which also doesn't make sense because yield farming doesn't involve the participation of exchanges at all. As mentioned in the article, the concept is that a smart contract accepts deposits and hands out tokens, which constitute the yield. No part of that requires exchanges.
    - DebtDeflation 4y ago
      You seem to be under the impression that a crypto exchange is like a modern day stock or commodities exchange. It is not. It's much more akin to a hybrid of an 1860's era wildcat bank and a 1900's era bucket shop. Their main business is NOT executing crypto trades on behalf of customers no matter what they might say.
      - Mistletoe 4y ago
        You really need to provide some citations. The fees are actually extremely lucrative, check the Coinbase filings during the bull run. The FTX trading fees were massive as well and is one of the reasons SBF is a profound idiot. He could have banked those fees forever but he wanted more and more gains so went to the dark side trading and using user funds and of course losing them. > The (FTX) crypto exchange's revenue soared more than 1,000% from $89 million to $1.02 billion in 2021.
rileymat2 4y ago
Not exactly, you should dig deeper, many brokers do use your shares. If you agree to it… and you very well could have not reading fine print. “To be clear, your brokerage firm cannot lend out your stocks without your permission. However, you may have signed a customer agreement that explicitly allows your broker to lend out your securities. This clause is often tucked deep within the customer agreement, and few investors pay much attention to it.” https://www.sonnlaw.com/faq/can-my-broker-lend-my-shares/ https://www.sonnlaw.com/faq/can-my-broker-lend-my-shares/
- kasey_junk 4y ago
  Those shares would still list you as the beneficial owner at Cede though so if the broker becomes insolvent (perhaps due to counterparty risk from short sellers) your shares are not available to other creditors and continue to be yours.

chessgecko 4y ago

The trick is that they pretended they were compliant with us regulations when they weren’t. Some users probably don’t mind this, but if there are issues they might change their mind.

ZeroGravitas 4y ago

Imagine you set up a seperate GDPR compliant site to keep the regulators happy, then behind the scenes transferred the customer info to the standard site and just continued to do all the stuff the GDPR tells you not to. Thats what they are alleging here, and why the supposedly seperate company is just a trick.

Sakos 4y ago

Did you read the post at all? > Binance.US was described as a separate entity from Binance that was merely licensing the name and certain features from the main company. > In public, Zhao said the new U.S. exchange – called Binance.US – was a “fully independent entity.” In reality, Zhao controlled Binance.US, directing its management from abroad, according to regulatory filings from 2020, company messages and interviews with former team members. An adviser, in a message to Binance executives, described the U.S. exchange as a “de facto subsidiary.” > These public issues have led many to wonder whether Binance and Binance.US are truly separate entities. We can now report that based on blockchain transfers, market data, and company disclosures, it appears that there is no meaningful separation between the two firms. In fact, we show that Binance.US both transfers customer deposits to Binance and pays customer withdrawals using transfers back from the offshore exchange’s wallets. Further, we demonstrate that trades allegedly happening on Binance.US’s exchange are likely being conducted directly on the main Binance exchange. > It turned out that Binance US apparently didn’t have enough USDT in its wallets to pay back customers for several hours. > However, Binance.US apparently had to pull money from the main Binance exchange to pay back customer withdrawals. In other words, Binance.US customers were paid back using funds transferred from the offshore Binance exchange! We must ask, why were U.S. customer assets held in Binance addresses? > We conclude that a significant portion of Binance.US customer deposits are commingled with other deposits on Binance’s main exchange. > Our data suggest that Binance.US’s “market maker” is a single pair of addresses that exclusively transfer funds between Binance and Binance.US. These addresses move customer assets from the U.S.-based exchange to the much larger offshore entity to perform trades. This means that for all practical purposes, there is no real difference between having your money with Binance.US or directly with Binance. Given that Binance was barred from doing business in the United States, it certainly appears that Binance.US is little more than a convenient fiction to evade regulators. > In reality, Binance.US appears to be little more than a facade to obfuscate the fact that an unregulated offshore crypto business currently under investigation for money laundering and sanctions violations is doing business in the United States despite being banned from the country. The post explains quite clearly why they call it a trick. If I use Vanguard in the US, it is a completely separate entity from Vanguard in Europe. This is to ensure they meet the regulations of where they're operating. This is standard operating procedure. What Binance is doing is not.

piva00 4y ago

> This isn’t a ploy or trick any more than a separate website for GDPR countries is a trick. If the EU citizens data is sneakily transferred out of jurisdiction and used without consent it's a trick and illegal by the GDPR.