What am I missing here?
- "A lot of activity" here means people withdrawing on the order of $4 billion from Binance in the last week alone, and that's net (deposits - withdrawals)
- CZ's much-touted Mazars "audit" that was nothing of the sort: liabilities missing entirely, Binance's massive stablecoin holdings missing entirely, only partial coverage of BTC/ETH holdings, sketchy transfers of large amounts into those account before the attestation and out right after, etc. Here's a good summary: https://youtu.be/42VnEndJ9mo
- Numerous regulatory organizations announcing investigations into Binance
- CZ's own leaked private comments about $250k withdrawals of Tether threatening to destabilize crypto as a whole (!?)
- Binance losing an unknown quantity to the FTX collapse, but at the very least a significant fraction of the $500M or so they had in FTT
Many of those things are not mentioned in the article at all, so thanks for adding additional information.
No it’s not. It’s unclear why some of the points are relevant to Binance’s health.
Edit: @rippercushions they are factually correct, but there is no context. With context, the points make even less sense.
Edit 2: @rippercushions Sorry then it’s not on your comment, just the parent’s proposal that it stands alone better than the speculation offered in the article.
GP was claiming there are "no indicators" that Binance is fucked, so I provided a list of recent things about Binance that sound pretty fucked to me.
Somehow I doubt that Binance is that on the level.
Coinbase maybe because they are US based and seem to be run by somewhat sane people.
Binance offers margin, with tiers including up to 10x leverage. This is a level you can only typically get to with Treasury securities in the US, which otherwise hearkens back to the 1920s before regulations to avoid this were put in place for very good reason, on securities that are much more stable than cryptocurrencies.
Solvency is dubious at best.
There’s a really simple solution for them and every reputable finance company (and many unreputable ones) - get an audit.
And they’ve dodged it for years. I can’t imagine a situation where I would ever bank with a company that wouldn’t be under regulation or have an independent confirmation of their solvency.
They are fucked in the sense that the only reason to not audit a multi-billion dollar firm that’s based on trust is that they are full of horse apples.
I’m surprised that they’ve lasted this long without blowing up. I hope they pull it out, for the sake of their customers.
Since there is nothing to support that, I can only assume that the raison d'etre of this article is that the author wants Binance to get fucked, so he's speculating. Because apparently that's how crypto works.
Look at FTX, Celsius et al, lots of people called FUD when issues were raised there...
For instance, do you think Tether is "fucked" too?
I'm not saying that Binance is doing everything great. I have no idea. But isn't saying that Binance is "fucked" a bit much at this time, with the current evidence at hand?
I'm just saying that this is bad journalism.
Yes, this is in fact the rationale approach to financial institutions. It is why solidly-run companies invest in audits: to demonstrate, on a regular basis, that they are solvent and stable (not fucked).
But yes, if a major financial company can't complete an independent audit to IFRS or similar standards, that's a major red flag. We know major crpyto exchanges can do it as Coinbase is audited by Deloitte's, so it's not that it's not possible.
and yes Tether falls into that category too.
Sorry about that.
I totally agree with you. I just don't agree with the use of the word "fucked". My related comment: https://news.ycombinator.com/item?id=34014786
Uh, yes!?!
> isn't saying that Binance is "fucked" a bit much at this time
Sort of. The claim is that all the signs are there. A “Binance is fucked” rhetoric may increase the bank run on them, which may fuck them.
The fact that they’re dealing with a bank run, in part out of fear that the same will happen to them as FTX, will increase the probability, all depending on how sound their business is.
If they start freezing accounts, we know we’re hitting bottom.
"Binance, the world's largest cryptocurrency exchange, paused withdrawals of the stablecoin USDC on Tuesday while it carried out a "token swap." USDC withdrawals were resumed about 8 hours after Binance first announced the pausing of withdrawals. Changpeng Zhao, CEO of Binance, tweeted on Tuesday that the exchange is seeing an increase in withdrawals of USDC."
Strategically timed 8 hour stoppages are not a sign things are going well.
Without more clarity, there's no way anyone can know for sure if all is well or not, and that's not a great place to put your money given there is likely no insurance if it goes wrong.
(Sorry for sounding clueless) they're a company without a physical (street) address?
Are there (m)any instances of legitimate companies without any physical presence? Not even a "Acme Widgets Inc c/o Fred Flintstone Accountants, 123 The High Street, Anytown..."?
If that's true why would they be coy about it?
There are loads of jurisdictions where every single company invoice has to state the company's registration details (registered number and registered address).
My guess about why Binance avoids having a headquarters location would be trying to reduce the risk of regulators and tax authorities paying a lot more attention to them.
Quite, which is why it seems so odd for any company to even consider skipping these steps [EDIT: or not wanting to share that they've been done]. Isn't this the kind of basic stuff that founders do in the first week of starting a business?
But if they're a fraud, they won't be "fucked" until 1/ they're exposed (some evidence of the fraud is posted somewhere), and 2/ people believe it, and there's a run, and they collapse because of the fraud -- since without the fraud, a run should not cause a collapse.
A simple rise in withdrawals isn't enough to announce their demise.
CEO says he can whether it via letting lawyers handle it, not very convincing as far as having $2billion handy to hand back via fraud conveyance issues with FTX.
"Binance Withdrawals Slow After Record Customer Outflows" https://www.bloomberg.com/news/articles/2022-12-15/withdrawa...
Hundreds of millions are leaving a day, but not the billions
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.
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.
Crypto sits on the border of greater-fool investing and Ponzi schemes.
- There will be a run on them as trust in Crypto is at an all time low
- Even a well run bank will struggle in this situation. Binance is not that.