Binance's Books Are a Black Box, Filings Show, As It Tries To Rally Confidence (reuters.com) 33
The world's biggest crypto exchange, Binance, is battling to shore up confidence after a surge in customer withdrawals and a steep drop in the value of its digital token. Reuters reports: The exchange said it dealt with net outflows of around $6 billion over 72 hours last week "without breaking stride" because its finances are solid and "we take our responsibility as a custodian seriously." After the collapse of rival exchange FTX last month, Binance's founder Changpeng Zhao promised his company would "lead by example" in embracing transparency. Yet a Reuters analysis of Binance's corporate filings shows that the core of the business -- the giant Binance.com exchange that has processed trades worth over $22 trillion this year -- remains mostly hidden from public view.
Binance declines to say where Binance.com is based. It doesn't disclose basic financial information such as revenue, profit and cash reserves. The company has its own crypto coin, but doesn't reveal what role it plays on its balance sheet. It lends customers money against their crypto assets and lets them trade on margin, with borrowed funds. But it doesn't detail how big those bets are, how exposed Binance is to that risk, or the full extent of its reserves to finance withdrawals. Binance is not required to publish detailed financial statements because it is not a public company, unlike U.S. rival Coinbase, which is listed on the Nasdaq. Nor has Binance raised outside capital since 2018, industry data show, which means it hasn't had to share financial information with external investors since then.
In an effort to look inside Binance's books, Reuters reviewed filings by Binance units in 14 jurisdictions where the exchange on its website says it has "regulatory licenses, registrations, authorisations and approvals." These locations include several European Union states, Dubai and Canada. Zhao has described the authorisations as milestones in Binance's "journey to being fully licensed and regulated around the world." The filings show that these units appear to have submitted scant information about Binance's business to authorities. The public filings do not show, for example, how much money flows between the units and the main Binance.com exchange. The Reuters analysis also found that several of the units appear to have little activity. Former regulators and ex-Binance executives say these local businesses serve as window dressing for the main unregulated exchange. Binance Chief Strategy Officer Patrick Hillmann said the Reuters analysis of the units' filings in the 14 jurisdictions was "categorically false."
Binance's Hillmann did not comment on the Reuters estimates. "The vast majority of our revenue is made on transaction fees," he said, adding that the exchange has been able to "accumulate large corporate reserves" by keeping expenses down. Binance's "capital structure is debt free" and the company keeps its money made from fees separate from the assets it buys and holds for users, Hillmann said.
Further reading: Binance US To Buy Bankrupt Voyager Digital's Assets for $1 Billion
Binance declines to say where Binance.com is based. It doesn't disclose basic financial information such as revenue, profit and cash reserves. The company has its own crypto coin, but doesn't reveal what role it plays on its balance sheet. It lends customers money against their crypto assets and lets them trade on margin, with borrowed funds. But it doesn't detail how big those bets are, how exposed Binance is to that risk, or the full extent of its reserves to finance withdrawals. Binance is not required to publish detailed financial statements because it is not a public company, unlike U.S. rival Coinbase, which is listed on the Nasdaq. Nor has Binance raised outside capital since 2018, industry data show, which means it hasn't had to share financial information with external investors since then.
In an effort to look inside Binance's books, Reuters reviewed filings by Binance units in 14 jurisdictions where the exchange on its website says it has "regulatory licenses, registrations, authorisations and approvals." These locations include several European Union states, Dubai and Canada. Zhao has described the authorisations as milestones in Binance's "journey to being fully licensed and regulated around the world." The filings show that these units appear to have submitted scant information about Binance's business to authorities. The public filings do not show, for example, how much money flows between the units and the main Binance.com exchange. The Reuters analysis also found that several of the units appear to have little activity. Former regulators and ex-Binance executives say these local businesses serve as window dressing for the main unregulated exchange. Binance Chief Strategy Officer Patrick Hillmann said the Reuters analysis of the units' filings in the 14 jurisdictions was "categorically false."
Binance's Hillmann did not comment on the Reuters estimates. "The vast majority of our revenue is made on transaction fees," he said, adding that the exchange has been able to "accumulate large corporate reserves" by keeping expenses down. Binance's "capital structure is debt free" and the company keeps its money made from fees separate from the assets it buys and holds for users, Hillmann said.
Further reading: Binance US To Buy Bankrupt Voyager Digital's Assets for $1 Billion
Domino day (Score:2)
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Damn it, I opened this article to post about dominos. Too slow today.
Anyway, I am happy to see financial reality closing in on all these scam companies. I hope SBF isn't the only one going to jail. There's a long list of crypto scumbags that belong there.
Vital Service (Score:2)
If Binance can take a tiny slice of every transaction they'll have a nice little earner until the powers that be decide to shut the whole thing down.
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Nothing to see here, folks, really!!! (Score:5, Funny)
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https://www.youtube.com/watch?... [youtube.com]
Real journalism surfaces out the "best" of the modern industry. Hard to be sure at this moment, but imo Binance really seems to be on some shaky footing, vibing a lot like FTX at the beginning.
I'm personally just sitting here with popcorn, waiting for the proverbial hammer to drop.
If Binance falls, it will be the absolute biggest crypto disaster in history -- they are the single largest crypto market and considered by many to be the bedrock of the industry. Honestly, if Bina
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Errr, not sure of the logic there.
Too big to fail needs a "how", how is their failing going to be avoided if they do become insolvent?
Bailout? I don't think so.
I don't think that's how it works.
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Bitcoin isn't holding steady. It is on a long term decline from 68k to 16k now and on the way to its true natural value: zero.
For a while Bitcoin was steady at 45k then 38k then 28k then 23k then 20k and now steady at 16k.
I don't think this word steady means what you think it means.
As far as NFT goes, a few million in fake digital goods is not representative in any way of the zillions of fake dollar value of the crypto market. SBF could have bought them all with his pocket change from jail.
Perhaps a basic
The outflows are all from whales (Score:1)
Remember you can get away with any crime you want as long as you only committed against vulnerable people. People think we have a two-tiered justice system but they're wrong. It's a multi-tiered justice system and as long as y
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Basically: Something, something ...
https://pbs.twimg.com/media/Fk... [twimg.com]
You're welcome.
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None of your usual class warfare conspiracy is necessary to explain why smart people would bail out now that the scam is finally wrapping up.
Why is class warfare your answer to everything?
You're a one-note Nancy.
wordsmithing (Score:2)
The exchange said it dealt with net outflows of around $6 billion over 72 hours last week "without breaking stride" because its finances
so pausing withdrawals isn't breaking stride?
Re:wordsmithing (Score:4, Interesting)
It is interesting the double standards here. If a bank pauses withdrawals, people will be freaking out and there will be government officials examining every crevice of their accounting. If an exchange does so, it is considered just doing part of daily business, and the people having holdings are considered the rubes.
If one does cryptocurrency, this further drives home the point of keeping your stuff in a non-custodial wallet, and only moving to an exchange when cashing out, after making sure the exchange will actually allow it. If your holdings are held under someone else's key/wallet, they might just gox [sic] away without warning.
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It is interesting the double standards here. If a bank pauses withdrawals, people will be freaking out and there will be government officials examining every crevice of their accounting. If an exchange does so, it is considered just doing part of daily business, and the people having holdings are considered the rubes.
I know, right? Almost as if...one of those entities are REGULATED, with fines and jail time expressly stipulated for regulations being sidestepped at the expense of depositors, while the other entity built its reputation on being unbeholden to those pesky regulations.
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If one does cryptocurrency, this further drives home the point that one should not do cryptocurrency.
FTFY. HTH. HAND.
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Binance CEO Changpeng Zhao elaborated in a tweet that as Binance saw heightened user withdrawals of USDC on Sunday and in the early hours of Monday morning, the exchange made the decision to pause withdrawals as the banks that could honour them were closed. Reuters, citing data firm Nansen, reported that these withdrawals of USDC totaled $US1.9 ($3) billion. Zhao also encouraged users to withdraw other stable coins, like BUSD.
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Trading cards (Score:2)
Iâ(TM)m amazed that people donâ(TM)t get it â¦
Bitcoin was meant to be money itself with no need to be converted to fiat. Basically crypto (in general) should be sent as trading cards.
A company dealing in crypto is not a bank and itâ(TM)s not needed to hold your fiat. LoL. They spend it as soon as you buy their trading cards. Theyâ(TM)ll buy them back sure but itâ(TM)s not an entitlement, itâ(TM)s just an option.
I know there are some cons that say theyâ(TM)re 1:1
Re: Trading cards (Score:2)
I am still amazed that people do not get it.
Bitcoin was meant to be money itself with no need to be converted to fiat. Basically crypto (in general) should be seen as trading cards.
A company dealing in crypto is not a bank and its not needed to hold your fiat. LoL. They spend it as soon as you buy their trading cards. They will buy them back⦠sure ⦠but its not an entitlement, its just an option.
I know there are some coins/cons that say they are 1:1 but they are not governed like banks
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Bitcoin was meant to be money itself with no need to be converted to fiat.
Except that Bitcoin transactions are, by design, far too expensive to use Bitcoin as money itself. I agree with you that it was intended to be used as a currency. But it's a really bad currency. Too unstable for anyone to express prices in it, and too expensive to transact.
"our revenue is made on transactions" (Score:1)
The only reason things are not crashing faster (Score:2)
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I'd say it's all gone down pretty fast.
Bitcoin down from 68k to 16k in how long? Super short. If Apple stock dropped that fast there'd be headlines about what will replace iPhone and Mac after Apple goes bankrupt.
But with crypto crap, they can halt withdrawals or "lose" billions in a "hack" or whatever and just post an "oops, sorry!" to their blog and life goes on.
HODL! These drops are buying opportunities! It can only go up long term!
"Is Binance.US a Fake Exchange?" (Score:2)
Is Binance.US a Fake Exchange? [substack.com]
The above newsletter points out some worrying indicators of the legitimacy of Binance's allegedly US-based exchange. It's only tangentially related to this article, but it (and many other of the articles on the site) are a really interesting read if you're curious about some of the seedier aspects of the crypto sphere.
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Based on public statements from CZ, Binance has taken billions in real money loans that are not due for 4-5 years. The good news is Binance could easily be of net value negative a few billions, and be in no immediate danger of closing the doors or denying withdrawals. The bad news is Binance could easily be of net value negative a few billions and they could easily hide that fact until 2026 when an implosion occurs and depositors take it on the nose.
I did quick look at cmseagle's link, and the gist of it
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I would point out that (to the degree you trust the research in the article I linked) that this:
Whether they... have already done something dodgy just like FTX.US/FTX/Alameda is simply unknowable, based on the public record at this point in time.
is an answered question. Binance claims that Binance.US is an independent entity, when it seems clear that it is not. That is dodgy. It would be fallacious to claim that such dodgy activity proves that there's other dodginess going on. But, given recent events in the crypto space, it'd be enough for me to want to keep my crypto assets well out of their hands, if I owned any.
And re: Binance's loans - I would
Too bad (Score:1)
It looks to me like the legitimate attempts to get corrupt government bureaucrats hands off the money system resulted in an opaque rats nest of private equally corrupt efforts to conjure, grab and hide the money. Too bad, but totally expected.
When a company tells you they are dedicated to transparency, but won’t disclose revenue, profit and cash reserves you have to assume you’re dealing with a hopelessly narcissistic corporate culture that is capable of convincing themselves of, well, anything
Funds are safu (Score:1)