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Comment by monero-xmr | Hacker News Reader

Binance is the closest thing to a global, borderless bank that exists today. They exist everywhere and nowhere. Their legal entities shift based on what is needed at the moment. They have the ability to easily create tens of millions of dollars as needed based on their BNB reserves, tight relationship with Tether, their ability to launch new token projects (i.e. unregulated securities offerings), and their stablecoin BUSD. They act as an investment bank - I know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition.

I would say it’s quite likely they are fractional reserve but they are so absolutely huge it would take a lot more FUD than exists currently to damage them even a little. They have a lot of room to maneuver.

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Ooh boy...

> Binance is the closest thing to a global, borderless bank that exists today.

There are several very large international banks you're ignoring.

> They exist everywhere and nowhere.

I read this as "we can do business with you everywhere, except if you need to sue us, at which point you can't sue us anywhere." Which is a massive red flag.

> Their legal entities shift based on what is needed at the moment.

Man, prosecutors are going to have a field day with this--this is gold mine for proving intent to defraud!

> They have the ability to easily create tens of millions of dollars as needed

One of the most poignant lessons of financial history is that wildcat banking does not make for stability.

> tight relationship with Tether

Extraordinarily high exposure to a creaky pillar of the cryptocurrency economy.

> their ability to launch new token projects (i.e. unregulated securities offerings)

Incredibly illegal in the US, which means they're in shitloads of trouble if they're actually trying to transact in USD and not magic-dollar-pegged tokens.

> They act as an investment bank - I know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition.

So their due diligence on loans is absolute and total shit. Their balance sheet must be creaking badly then!

> they are so absolutely huge it would take a lot more FUD than exists currently to damage them even a little

The thing about too big to fail is that it's not that someone is so big there's no way they can fail; it's that someone is so big the government is forced to bail them out instead of letting them fail. Given that cryptocurrency is dominated by people at best thumbing their noses at the idea of government control, what government is going to be willing to step in to save the failing too big to fail crypto bank?

It sounds like you should know that Binance has a fully regulated and approved United States entity at https://Binance.us

So did FTX.

"has" != "is"

As their licenses (https://support.binance.us/hc/en-us/articles/360050532193) state, it's entirely appropriate to use Binance for transmitting payments, for which they're approved and regulated, and entirely inappropriate to trust Binance for any investment, for which they are not licensed. The key part of being a bank or a broker is about properly holding others' funds as liabilities or in custody respectively (and so are the relevant regulations), which Binance.us can't do.

From the slogan at Binance.com homepage "buy, trade, hold" it's approved to do only the first two.

> The thing about too big to fail is that it's not that someone is so big there's no way they can fail; it's that someone is so big the government is forced to bail them out instead of letting them fail. Given that cryptocurrency is dominated by people at best thumbing their noses at the idea of government control, what government is going to be willing to step in to save the failing too big to fail crypto bank?

This is some of why tether is still going strong, I think. Everyone in the crypto economy has enormous exposure to tether blowing up, so everyone tries to ignore it.

The people doing the bailing out are everyone who holds crypto, I guess. This was done explicitly when Bitfinex's money launderer stole their money -- Bitfinex did a "bail-in" where they gave all their customers except coinbase something like an 80% haircut.

Not saying you're wrong, but there is a parallel that has propped up the ecosystem for quite some time! And I guess it gets worse: as too-big-to-fail entities don't fail, they get bigger and perceived-safer which works until it doesn't.

I hope you realize that while you're trying to argue that all of this is a good thing, it's actually making them sound worse-than-FTX levels of sketchy.

I am someone who believes in maximal decentralization, I am fine with FTX imploding let alone Binance. I am just stating an observation of the Binance situation.

This absolutely screams red flags.

> know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition

I work in finance and can guarantee you that I wouldn't touch such a "bank" with a 50 foot pole while wearing a hazmat suit.

Let's just say that their "risk management" doesn't seem up to scratch if what you're claiming is true.

> They have the ability to easily create tens of millions of dollars as needed based on their BNB reserves

Sounds like a huge red flag.

Woohoo magic mystery money! How did that work out for FTX with FTT?

I was told crypto was the answer to central banks printing money. Ironically a tech friend predicted all this way way back at the start, I mentioned one of the advantages of bitcoin was the fixed amount and he replied "What stops your exchange from showing $1000 on the webpage but not actually holding that amount?"

Exactly the problem unfolding years later.

That sounds like a massive red flagged fraud.

This... is not reassuring.

They exist everywhere, except for all the countries that have specifically banned them for not complying with national laws.

Fantastic! How do I give them all my money?

People really falling for a machine-generated comment here. Don't feed the troll

Not feeding trolls is a good principle but I doubt this is a generated comment, let's save that accusation for when we need it, and when we do make it let's make it with evidence.

If we just start accusing each other of being bots whenever we think someone is trolling or acting in bad faith we're going to create cover for the actual bots.

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