8 ms·

Binance is under threat

55 points by qsi 3y ago

gitfan86 3y ago
Who would have thought that a pyramid scheme wouldn't last forever.
- dang 3y ago
  "Eschew flamebait. Avoid generic tangents." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - gitfan86 3y ago
    1. Crypto is a pyramid scheme. I've been saying this since 2011. And it is very well proven by the flow of money over the past 12 years. 2. How is this a tangent? It is directly related to the problems discussed in the post
    - dang 3y ago
      Low-information putdowns are flamebait regardless of how right you are or feel you are. The article was about the specific current situation of Binance. You didn't respond to anything specific in the article. Changing the subject to the 50,000th repetition of the Generic Crypto Flamewar was not only a generic tangent but a perfect example thereof. Perhaps this might help: the point of HN threads isn't to be right, but to have curious, mutually interesting conversation. That's quite different from repeating the same things over and over, no? That's about as far from curious conversation as it's possible to get. If a conversation can be predicted, then it's not what we want here. There's another aspect too—predictable conversations, especially on divisive topics, inevitably turn nasty. My theory is that the mind resorts to indignation to amuse itself in the absence of new information (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=mind%20amuse%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...). Whether that's true or not, we're definitely looking for conversations that organize around new information.
civilitty 3y ago
https://archive.ph/87OhS https://archive.ph/87OhS
rsynnott 3y ago
Ever since MtGox, a familiar headline, reusable every year or so, with only the specific identity of the biggest crypto firm needing be changed. (Though, who's next? Not that many still standing, really.)
- saalweachter 3y ago
  The thing to remember about Bitcoin, et al, is that it's decentralized. Sure, the code base may be gate-kept by a small clique of developers, sure, the mining may be largely done by a handful of coordinating mining pools, sure, you may need specialized hardware only manufactured by a couple of shady foundries, sure, all of the money may enter and exit through one or two exchanges pretending to comply with various money-laundering laws. But the scam, the scam is beautifully decentralized. In a normal scam, there's one or two people at the top who will eventually cut and run or go to jail, and the entire pyramid collapses beneath them. Bitcoin? There's no one at the top. Anyone can just jump in and start scamming, and they'll grow and grow until they maybe reach the top and implode, and then without missing a beat a new group of scammers will be ready to take over even as the last undergoes a very public trial or a very quiet disappearance. Behold, the power of decentralization.
  - rglullis 3y ago
    Stop equating crypto with Bitcoin. This is one of the worst straw-men used by dishonest people.
    - kkielhofner 3y ago
      I always hear this and I'm interested where the point of view comes from. Can you elaborate? Fair warning I am one of the people who thinks it's all the same. Even though I have a lot of experience in the space when you zoom out a tiny bit for the average person it starts to look a lot like us arguing vi vs emacs - religion and meaningless and esoteric distinctions to the 99.999%.
      - rglullis 3y ago
JonathanBeuys 3y ago
The market does not agree: https://www.google.com/finance/quote/BNB-USD?window=MAX https://www.google.com/finance/quote/BNB-USD?window=MAX
- skywhopper 3y ago
  What does that chart have to do with the article?
  - patrickk 3y ago
    BNB is a token issued by Binance to faciliate trading on their platform. If it dropped in value, it could indicate a lack of confidence in the platform itself (it's price could also be manipulated of course). "BNB can be used to pay for fees when trading on Binance, and usually at a discounted rate. Due to the primary utility, BNB has seen massive growth in interest throughout the years . Several rounds of token burn events have appreciated BNB price and pushed it up as one of the top-10 cryptocurrencies by market capitalization." https://www.coingecko.com/en/coins/bnb https://www.coingecko.com/en/coins/bnb
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rglullis 3y ago
So a system that is designed and meant to work trustlessly, rejects centralization, big institutions and middlemen showing that it will not be long-term sustainable for any actor that tries to become a big middleman? Why am I not surprised...
drug-freedom 3y ago
I'm still waiting for the "obvious scam that Tether is which is printing fake dollars as everybody knows" to implode. Any moment now. BTW, wasn't the narrative that crypto goes up because it's bought with printed Tethers? Why aren't they printing some now to start another bull market?
- earnesti 3y ago
  How many years have you been waiting? Tether was launched in 2014...
- theGnuMe 3y ago
  Matt Levine has an article on Tether and how tether is the perfect business except for them loaning crypto to customers. https://www.bloomberg.com/opinion/articles/2023-09-21/tether-keeps-lending-tethers https://www.bloomberg.com/opinion/articles/2023-09-21/tether...
  - skizm 3y ago
    It is great as long as they are actually sticking to short dated US t-bills. They've just been super sketchy about if they are or are not in the past. Personally I think they're fine. The absolute worst case there's a run and depositors only get back like 75 cents on the dollar. Which is way better than most places that people park crypto.
    - schemescape 3y ago
      My amateur theory is that Tether could have imploded for most of its existence, but now there’s a real chance that they have been (or will be) able to bluff their way to solvency. But I’m probably wrong…
    - loeg 3y ago
      The worst case is zero cents on the dollar.
  - loeg 3y ago
    > the perfect business except for them loaning crypto to customers Well, and assuming they have any significant fraction of the assets they claim to have.
kang 3y ago
> Crypto firm Binance or exchanges are 'anti' crypto. Buying/Selling crypto defeats the purpose of crypto entirely, rather supports fiat(do the math please). Exchanges must die before crypto even starts working.
- rglullis 3y ago
  Agree with the sentiment, but not the magnitude. We are still going to need on-ramps/off-ramps and it would be better if they were legal and regulated to be small. Exchanges are still going to be needed. "Retail banking" with managed wallets are still going to be needed. Only allow them to operate in one country, put a cap on the the maximum amount of funds/accounts they can have and get rid of any "investment" scheme. Essentially, something like the crypto version of credit co-ops.
  - kang 3y ago
    Why are exchanges/onoff-ramps needed?? Mining, swaping, burning, spending is enough. And where it's not, the use-case is not decentralized (has centralized governance or has known membership) & can be achieved more efficiently via fiat.
    - rglullis 3y ago
      Tell me with a straight face that you'd voluntarily buy something from China and send them crypto for payment.
    - bruce511 3y ago
      How can I buy bitcoin, to pay the ransomware if there's no on-ramp?
      - kang 3y ago
        Nice tongue-in-cheek joke. Don't. At a given time, you are to be crypto savvy & be protected in the first place or don't be crypto savvy & use the legal system with fiat for better efficiency & solution
deleted 3y ago
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sosuke 3y ago
Love that the charts and several data points are actually about Binance US which has been dying for a while. Binance global though seems to be doing okay. Binance US is dead no doubts about it. Binance won't be available for US customers. I'm not sure if the article has a point though. The TLDR seems to be Binance's overall size is reducing because Binance US is closing shop.
yieldcrv 3y ago
Most of Binance's trading activity isn't about being an "onramp" for crypto, it is mostly crypto to crypto trades, in which case the onchain solutions are far superior. The sooner these vestiges of a prior crypto era are torn apart, the better. Within the crypto space, these exchanges are extortionate to project communities and the project founders, and a lot of it can't be talked about because that ensures no listing on Binance, and thats just the tip of the iceberg of what people have to put up with, all of the eastern exchanges have similar practices. eastern europe too, but and to a much lesser extent the US exchanges but to the point that it’s impossible to get listed unless all the VCs backed you. Outside the crypto space, its pretty obvious that the discussion is much more juvenile, any distress with any crypto exchange represents "crypto" as a whole, and validates whatever people already believe. So the sooner these mismanaged companies go away, the sooner that conversation can mature. Unpermissioned market making onchain has been a major boon to the crypto space, and so these exchanges like Binance are not necessary. Most of the major wallets have ways of getting fiat into the crypto space, and they can become the primary users of onramps. Both Block and Paypal are crypto exchanges, all that infrastructure is there by better managed companies, and trading of more esoteric asset pairs can be done onchain, as it already is.
m00dy 3y ago
Under current SEC regime, I think everybody is under threat.
MrRadar 3y ago
> One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown. If you think a crypto exchange you're doing business with is on shaky ground, the time to withdraw is now. So many crypto exchange collapses have shown that you need to withdraw before the "meltdown" if you want to ensure your assets are safe. If you wait you end up in bankruptcy purgatory for years and might only get a fraction of what you're owed.
- kkielhofner 3y ago
  > ensure your assets are safe It's been demonstrated time and time again this isn't practical. In crypto your choice is either worry about an exchange collapsing or worry about losing your keys, having your wallet cleaned out by some scammer, etc. The chances of either are very, very high. "Not your keys, not your coins" just as easily (or even more so) becomes "you don't have your keys" or "some scammer has your coins". Cue twitter and reddit posts from crypto enthusiasts saying "Oh you should have engraved your seed on steel plates and buried them under the birdbath in your backyard. Sorry you lost everything but hopefully you learned your lesson. Now buy more and try again!".
  - wmf 3y ago
    At the institutional level I don't think this is true. There are pretty reliable custody options that are far less shady than Binance.
    - kkielhofner 3y ago
      > There are pretty reliable custody options When the best possible description someone can use is "pretty reliable" I think that underscores my point. FTX was considered to be in this category for years. Question now is, when will the next "pretty reliable" custodian go the way of FTX? When, not if. I've been following the space very closely for years and the shenanigans involving other people's money are unreal. Are you aware the former CTO of Kraken was completely anonymous? Literally an avatar - try to find their name anywhere. Kraken employees didn't even know who they were - never came to the office, events, or even turned their camera on in meetings. I would imagine someone in payroll/HR or something knew who they were but maybe not, and they were getting paid in crypto? Kraken, also considered one of the "more reliable" custodians for years, where the entire platform was in the hands of some random person who could disappear in the night with no reputational harm. Speaking of Kraken, take a look at their executive turnover. Very reliable. I wanted to believe in the underlying technology for years but it's fundamentally and inextricably linked to other people's finances and there has been plenty of time for this kind of clownish behavior to work itself out. Crypto is almost old enough to have a Driver's License in the US which makes it a senior citizen in technology terms. It has had plenty of time to grow up but I think it's clear it never will.
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rsynnott 3y ago
> One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown. … If you’re conducting fire drills on withdrawing your assets when Binance implodes… why not just withdraw them now? Like, it is not the only exchange.

55 points by qsi 3y ago

gitfan86 3y ago

Who would have thought that a pyramid scheme wouldn't last forever.

dang 3y ago
"Eschew flamebait. Avoid generic tangents." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- gitfan86 3y ago
  1. Crypto is a pyramid scheme. I've been saying this since 2011. And it is very well proven by the flow of money over the past 12 years. 2. How is this a tangent? It is directly related to the problems discussed in the post
  - dang 3y ago
    Low-information putdowns are flamebait regardless of how right you are or feel you are. The article was about the specific current situation of Binance. You didn't respond to anything specific in the article. Changing the subject to the 50,000th repetition of the Generic Crypto Flamewar was not only a generic tangent but a perfect example thereof. Perhaps this might help: the point of HN threads isn't to be right, but to have curious, mutually interesting conversation. That's quite different from repeating the same things over and over, no? That's about as far from curious conversation as it's possible to get. If a conversation can be predicted, then it's not what we want here. There's another aspect too—predictable conversations, especially on divisive topics, inevitably turn nasty. My theory is that the mind resorts to indignation to amuse itself in the absence of new information (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=mind%20amuse%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...). Whether that's true or not, we're definitely looking for conversations that organize around new information.

civilitty 3y ago

https://archive.ph/87OhS https://archive.ph/87OhS

rsynnott 3y ago

Ever since MtGox, a familiar headline, reusable every year or so, with only the specific identity of the biggest crypto firm needing be changed. (Though, who's next? Not that many still standing, really.)

saalweachter 3y ago
The thing to remember about Bitcoin, et al, is that it's decentralized. Sure, the code base may be gate-kept by a small clique of developers, sure, the mining may be largely done by a handful of coordinating mining pools, sure, you may need specialized hardware only manufactured by a couple of shady foundries, sure, all of the money may enter and exit through one or two exchanges pretending to comply with various money-laundering laws. But the scam, the scam is beautifully decentralized. In a normal scam, there's one or two people at the top who will eventually cut and run or go to jail, and the entire pyramid collapses beneath them. Bitcoin? There's no one at the top. Anyone can just jump in and start scamming, and they'll grow and grow until they maybe reach the top and implode, and then without missing a beat a new group of scammers will be ready to take over even as the last undergoes a very public trial or a very quiet disappearance. Behold, the power of decentralization.
- rglullis 3y ago
  Stop equating crypto with Bitcoin. This is one of the worst straw-men used by dishonest people.
  - kkielhofner 3y ago
    I always hear this and I'm interested where the point of view comes from. Can you elaborate? Fair warning I am one of the people who thinks it's all the same. Even though I have a lot of experience in the space when you zoom out a tiny bit for the average person it starts to look a lot like us arguing vi vs emacs - religion and meaningless and esoteric distinctions to the 99.999%.
    - rglullis 3y ago

JonathanBeuys 3y ago

The market does not agree: https://www.google.com/finance/quote/BNB-USD?window=MAX https://www.google.com/finance/quote/BNB-USD?window=MAX

skywhopper 3y ago
What does that chart have to do with the article?
- patrickk 3y ago
  BNB is a token issued by Binance to faciliate trading on their platform. If it dropped in value, it could indicate a lack of confidence in the platform itself (it's price could also be manipulated of course). "BNB can be used to pay for fees when trading on Binance, and usually at a discounted rate. Due to the primary utility, BNB has seen massive growth in interest throughout the years . Several rounds of token burn events have appreciated BNB price and pushed it up as one of the top-10 cryptocurrencies by market capitalization." https://www.coingecko.com/en/coins/bnb https://www.coingecko.com/en/coins/bnb

deleted 3y ago

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rglullis 3y ago

So a system that is designed and meant to work trustlessly, rejects centralization, big institutions and middlemen showing that it will not be long-term sustainable for any actor that tries to become a big middleman? Why am I not surprised...

drug-freedom 3y ago

I'm still waiting for the "obvious scam that Tether is which is printing fake dollars as everybody knows" to implode. Any moment now. BTW, wasn't the narrative that crypto goes up because it's bought with printed Tethers? Why aren't they printing some now to start another bull market?

earnesti 3y ago
How many years have you been waiting? Tether was launched in 2014...
theGnuMe 3y ago
Matt Levine has an article on Tether and how tether is the perfect business except for them loaning crypto to customers. https://www.bloomberg.com/opinion/articles/2023-09-21/tether-keeps-lending-tethers https://www.bloomberg.com/opinion/articles/2023-09-21/tether...
- skizm 3y ago
  It is great as long as they are actually sticking to short dated US t-bills. They've just been super sketchy about if they are or are not in the past. Personally I think they're fine. The absolute worst case there's a run and depositors only get back like 75 cents on the dollar. Which is way better than most places that people park crypto.
  - schemescape 3y ago
    My amateur theory is that Tether could have imploded for most of its existence, but now there’s a real chance that they have been (or will be) able to bluff their way to solvency. But I’m probably wrong…
  - loeg 3y ago
    The worst case is zero cents on the dollar.
- loeg 3y ago
  > the perfect business except for them loaning crypto to customers Well, and assuming they have any significant fraction of the assets they claim to have.

kang 3y ago

> Crypto firm Binance or exchanges are 'anti' crypto. Buying/Selling crypto defeats the purpose of crypto entirely, rather supports fiat(do the math please). Exchanges must die before crypto even starts working.

rglullis 3y ago
Agree with the sentiment, but not the magnitude. We are still going to need on-ramps/off-ramps and it would be better if they were legal and regulated to be small. Exchanges are still going to be needed. "Retail banking" with managed wallets are still going to be needed. Only allow them to operate in one country, put a cap on the the maximum amount of funds/accounts they can have and get rid of any "investment" scheme. Essentially, something like the crypto version of credit co-ops.
- kang 3y ago
  Why are exchanges/onoff-ramps needed?? Mining, swaping, burning, spending is enough. And where it's not, the use-case is not decentralized (has centralized governance or has known membership) & can be achieved more efficiently via fiat.
  - rglullis 3y ago
    Tell me with a straight face that you'd voluntarily buy something from China and send them crypto for payment.
  - bruce511 3y ago
    How can I buy bitcoin, to pay the ransomware if there's no on-ramp?
    - kang 3y ago
      Nice tongue-in-cheek joke. Don't. At a given time, you are to be crypto savvy & be protected in the first place or don't be crypto savvy & use the legal system with fiat for better efficiency & solution

deleted 3y ago

[deleted]

sosuke 3y ago

Love that the charts and several data points are actually about Binance US which has been dying for a while. Binance global though seems to be doing okay. Binance US is dead no doubts about it. Binance won't be available for US customers. I'm not sure if the article has a point though. The TLDR seems to be Binance's overall size is reducing because Binance US is closing shop.

yieldcrv 3y ago

Most of Binance's trading activity isn't about being an "onramp" for crypto, it is mostly crypto to crypto trades, in which case the onchain solutions are far superior. The sooner these vestiges of a prior crypto era are torn apart, the better. Within the crypto space, these exchanges are extortionate to project communities and the project founders, and a lot of it can't be talked about because that ensures no listing on Binance, and thats just the tip of the iceberg of what people have to put up with, all of the eastern exchanges have similar practices. eastern europe too, but and to a much lesser extent the US exchanges but to the point that it’s impossible to get listed unless all the VCs backed you. Outside the crypto space, its pretty obvious that the discussion is much more juvenile, any distress with any crypto exchange represents "crypto" as a whole, and validates whatever people already believe. So the sooner these mismanaged companies go away, the sooner that conversation can mature. Unpermissioned market making onchain has been a major boon to the crypto space, and so these exchanges like Binance are not necessary. Most of the major wallets have ways of getting fiat into the crypto space, and they can become the primary users of onramps. Both Block and Paypal are crypto exchanges, all that infrastructure is there by better managed companies, and trading of more esoteric asset pairs can be done onchain, as it already is.

m00dy 3y ago

Under current SEC regime, I think everybody is under threat.

MrRadar 3y ago

> One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown. If you think a crypto exchange you're doing business with is on shaky ground, the time to withdraw is now. So many crypto exchange collapses have shown that you need to withdraw before the "meltdown" if you want to ensure your assets are safe. If you wait you end up in bankruptcy purgatory for years and might only get a fraction of what you're owed.

kkielhofner 3y ago
> ensure your assets are safe It's been demonstrated time and time again this isn't practical. In crypto your choice is either worry about an exchange collapsing or worry about losing your keys, having your wallet cleaned out by some scammer, etc. The chances of either are very, very high. "Not your keys, not your coins" just as easily (or even more so) becomes "you don't have your keys" or "some scammer has your coins". Cue twitter and reddit posts from crypto enthusiasts saying "Oh you should have engraved your seed on steel plates and buried them under the birdbath in your backyard. Sorry you lost everything but hopefully you learned your lesson. Now buy more and try again!".
- wmf 3y ago
  At the institutional level I don't think this is true. There are pretty reliable custody options that are far less shady than Binance.
  - kkielhofner 3y ago
    > There are pretty reliable custody options When the best possible description someone can use is "pretty reliable" I think that underscores my point. FTX was considered to be in this category for years. Question now is, when will the next "pretty reliable" custodian go the way of FTX? When, not if. I've been following the space very closely for years and the shenanigans involving other people's money are unreal. Are you aware the former CTO of Kraken was completely anonymous? Literally an avatar - try to find their name anywhere. Kraken employees didn't even know who they were - never came to the office, events, or even turned their camera on in meetings. I would imagine someone in payroll/HR or something knew who they were but maybe not, and they were getting paid in crypto? Kraken, also considered one of the "more reliable" custodians for years, where the entire platform was in the hands of some random person who could disappear in the night with no reputational harm. Speaking of Kraken, take a look at their executive turnover. Very reliable. I wanted to believe in the underlying technology for years but it's fundamentally and inextricably linked to other people's finances and there has been plenty of time for this kind of clownish behavior to work itself out. Crypto is almost old enough to have a Driver's License in the US which makes it a senior citizen in technology terms. It has had plenty of time to grow up but I think it's clear it never will.

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rsynnott 3y ago

> One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown. … If you’re conducting fire drills on withdrawing your assets when Binance implodes… why not just withdraw them now? Like, it is not the only exchange.