Could Binance be next FTX because it endured 1 billion of net outflows on today? CoinDesk said that Binance Withdrawals Surge as Concerns About Its Reserve Report Spook Traders. Reuters reported that U.S. prosecutors are mulling criminal charges for possible money laundering against Binance and its executives, including CZ. I am very cautious to invest in crypto currencies |
If the assets are BTC and ETH and the values float then variations in value just happen. If they are stable coins people are going to mad if a $1.00 coin is worth just $0.95 and you will really have a run.
Ordinary stockbrokers can break down and be unable to sell your stock for you, that is why the SIPC was formed in the 1960s crash. Bin ace is also facing big trouble because it has dodgy customers, banks really hate their KYC responsibilities because they’d rather not ask what customers are doing but in a world where the Republicans, Tories, and similar parties won’t let governments raise taxes it is all they can do to make sure they collect the taxes they are owed.
https://twitter.com/tether_to/status/1602654597805445123
Presumably they will shore up USDC in short order.
I do think Binance is shady, but so far they seem to be responding as well as one would expect from this magnitude of withdrawals.
https://twitter.com/tether_to/status/1602654597805445123
It was troublesome for a day, and not surprising giving the amount of withdrawals.
I still think Binance is shady, but this is not showing itself to be anything more than large market moves so far.
I don’t think they necessarily hold it all in house, I believe they pay an institution to manage holding reserves for insurance and security reasons.
Agree with you on the bad accounting though and that we will find out soon how bad it is.
That is unconvincing. If they had the USDC in cold storage they could easily see the uptick in withdrawals and prepare the necessary funds. The only moment you become dependent on outside parties, such as, as they claim, the opening hours a random bank in New York, is when you don't have those assets at all and need to repurchase them on the market. If they can't manage a cold wallet, they have no business being the largest crypto exchange, there's nobody more qualified for that task and most certainly you wouldn't outsource it to some smaller provider.
In fact what Binance does is they convert any incoming stablecoin to their own native stablecoin, BUSD. This simplifies operations (as they don't have to maintain multiple crypto-stable pairs) and injects liquidity and reserves into their token, but also exposes depositors to any issue with BUSD (and Binance) itself, because any run will likely extract all liquid assets first.
This is exactly what happened during the FTX crash, they frenzy sold bitcoin, USDC, USDT and anything liquid they could get their hands on until all they had left where "billions" in worthless crap like FTT and related garbage tokens.