Binance Can't Keep Its Story Straight on Misplaced $1.8B USDC (coindesk.com) 32
A new and detailed investigation by Forbes has raised significant questions about the management and custody of customer assets and stablecoin collateral by Binance. From a report: There are many possible explanations for the nature and intent of certain on-chain transactions highlighted by Forbes, and they could be entirely innocuous. But Binance's so far confused and sometimes contradictory responses to the findings do not inspire confidence, particularly in a post-FTX era of rightfully widespread suspicion of centralized custodians with off-chain balance sheets. A new and detailed investigation by Forbes has raised significant questions about the management and custody of customer assets and stablecoin collateral by Binance. There are many possible explanations for the nature and intent of certain on-chain transactions highlighted by Forbes, and they could be entirely innocuous. But Binance's so far confused and sometimes contradictory responses to the findings do not inspire confidence, particularly in a post-FTX era of rightfully widespread suspicion of centralized custodians with off-chain balance sheets.
Forbes reported this week that on a single day, Aug. 17, 2022, $1.78 billion worth of collateral moved out of Binance wallets intended to back stablecoins, particularly b-USDC, a wrapped version of Circle's USDC. According to Forbes' on-chain analysis, the facts of which Binance has not disputed, $1.2 billion of this was sent to trading firm Cumberland DRW, with other amounts going to now-collapsed hedge fund Alameda Research, Tron founder Justin Sun and crypto infrastructure and services firm Amber Group. Crucially, according to Forbes, this outflow was not accompanied by a corresponding reduction in the circulating supply of b-USDC tokens. Binance's various attempts to offer an innocent explanation of Forbes' findings have not provided a unified and consistent -- much less entirely compelling -- justification for what could, in the worst case, indicate the misuse of customer funds. Before publishing a more focused and detailed account Wednesday morning, Binance officials offered a number of differing, even contradictory explanations.
Equally galling, Binance's responses have continued the petulant and defensive tone of many of its previous dismissals of close investigative attention. Forbes' investigation was motivated by mounting evidence of past problems with Binance's asset management practices. Binance has admitted to Bloomberg that, for certain periods of time, it failed to maintain clear 1:1 backing of its wrapped b-assets in a segregated and transparent manner. In this context, the exchange's attempt to paint an act of journalistic analysis as "conspiracy theories," while suggesting the investigation was motivated by nothing but "collecting a lot of views and clicks," is beneath the dignity of an organization hoping to maintain a leadership position in a high-risk, fraud-riddled industry. Binance CEO Changpeng Zhao even retreated to the oldest refuge of scrutinized crypto organizations, declaring the Forbes reporting nothing more than "FUD," or fear, uncertainty and doubt. But this lazy, knee-jerk dismissal, now as ever, ignores a simple reality: Unclear or incomplete answers from the people most obligated to have them are far more serious sources of confusion and anxiety than accepted facts and reasonable questions surfaced by journalists.
Forbes reported this week that on a single day, Aug. 17, 2022, $1.78 billion worth of collateral moved out of Binance wallets intended to back stablecoins, particularly b-USDC, a wrapped version of Circle's USDC. According to Forbes' on-chain analysis, the facts of which Binance has not disputed, $1.2 billion of this was sent to trading firm Cumberland DRW, with other amounts going to now-collapsed hedge fund Alameda Research, Tron founder Justin Sun and crypto infrastructure and services firm Amber Group. Crucially, according to Forbes, this outflow was not accompanied by a corresponding reduction in the circulating supply of b-USDC tokens. Binance's various attempts to offer an innocent explanation of Forbes' findings have not provided a unified and consistent -- much less entirely compelling -- justification for what could, in the worst case, indicate the misuse of customer funds. Before publishing a more focused and detailed account Wednesday morning, Binance officials offered a number of differing, even contradictory explanations.
Equally galling, Binance's responses have continued the petulant and defensive tone of many of its previous dismissals of close investigative attention. Forbes' investigation was motivated by mounting evidence of past problems with Binance's asset management practices. Binance has admitted to Bloomberg that, for certain periods of time, it failed to maintain clear 1:1 backing of its wrapped b-assets in a segregated and transparent manner. In this context, the exchange's attempt to paint an act of journalistic analysis as "conspiracy theories," while suggesting the investigation was motivated by nothing but "collecting a lot of views and clicks," is beneath the dignity of an organization hoping to maintain a leadership position in a high-risk, fraud-riddled industry. Binance CEO Changpeng Zhao even retreated to the oldest refuge of scrutinized crypto organizations, declaring the Forbes reporting nothing more than "FUD," or fear, uncertainty and doubt. But this lazy, knee-jerk dismissal, now as ever, ignores a simple reality: Unclear or incomplete answers from the people most obligated to have them are far more serious sources of confusion and anxiety than accepted facts and reasonable questions surfaced by journalists.
Siberia (Score:3)
I hear that Siberia is a great placed for disgraced crypto scammers.
Comment removed (Score:5, Funny)
Re: (Score:2)
+1 funny if I had mod points
Actually... (Score:3, Insightful)
I hear that Siberia is a great placed for disgraced crypto scammers.
That was yesterday. Today that would be Donetsk.
Which is too true to be quite as funny as I'd like it to be.
Re: (Score:2)
I'm thinking the new thing is base jumping out of your multi-million dollar apartment when you get caught for fraud. [abc7ny.com]
Maybe we should set up a judging stand outside these crypto execs' residential buildings to score their dives appropriately?
They can clear it up (Score:3)
Binance CEO Changpeng Zhao even retreated to the oldest refuge of scrutinized crypto organizations, declaring the Forbes reporting nothing more than "FUD," or fear, uncertainty and doubt.
If it's FUD, then give the real answer. That will clear up everything.
Won't bring the $1.8 USDC back though. It'll just keep you out of jail.
Re: (Score:3)
The truth is very unlikely to keep him out of jail, just make the prosecution easier.
shocking, just shocking (Score:5, Insightful)
It's become like a religion - impervious to fact, observation and reality.
Galling? (Score:2)
From the article:
Equally galling, Binance's responses have continued the petulant and defensive tone of many of its previous dismissals of close investigative attention.
Do you really expect a pack of over-intelligent millennials to take what they see as a blockchain video game seriously? Bankman-Fried had so little attention span he would play video games [yahoo.com] during high-level meetings. I don't expect the Binance folks are much different.
I choose YOU MegaMoneroDon! Gotta cactch em all - let's use the entire power grid of a minor G20 nation and waste it into heat to generate wealth! Whoops... did I transpose a digit on that 128 byte base64 string? Wonder w
Re: (Score:2)
I'm not sure why you make the assumption that they're "over-intelligent". The only thing that's intuitively obvious is they're skilled at grifting.
Re: (Score:2)
I'm not sure why you make the assumption that they're "over-intelligent". The only thing that's intuitively obvious is they're skilled at grifting.
Skill at grifting is an important component of intelligence. Another component is not getting caught, which some of them are apparently not very good at.
Re: (Score:1)
Re: (Score:2)
Given his known public history, my vote is dumb ass and criminal but the courts will sort it out.
Re: (Score:2)
Except that we are not talking about Joe Sixpack in fly over country who might have grown up with parents that would have not have had access to healthcare to get him evaluated. We are not talking about someone struggling to get by who might think not treating their ADHD and avoiding some co-pays is a good strategy to help make rent this month.
We are talking about a guy who grew up with not just University professors for parents but elite university progressives. He comes from a world of money and privilege
Conspiracy Theories (Score:1)
>In this context, the exchange's attempt to paint an act of journalistic analysis as "conspiracy theories," while suggesting the investigation was motivated by nothing but "collecting a lot of views and clicks," is beneath the dignity of an organization hoping to maintain a leadership position...
Over the past 4-5 year, whenever people in power (and in particular government) did not want to answer questions, they simply relied on the term "conspiracy theory" as justification to wave-off providing any resp
Re: Conspiracy Theories (Score:2)
Ok, Iâ(TM)ll bite.
Which ones? And it better be âa very large number.â(TM) Letâ(TM)s start at 1,000. Iâ(TM)d like at least 1,000 examples.
Occam's razor (Score:4, Insightful)
What's more likely?
1. A crypto exchange made off with or lost their customers' funds. Again.
2. There's some deep-state FUD conspiracy in the media against this specific exchange.
Re: (Score:2)
made off
In more ways than one ;)
Re: (Score:3)
Crypto is here to make currency great again. Anything else said is a hoax.
How hard can it be? (Score:4, Funny)
Re: How hard can it be? (Score:1)
This happens in a summary almost daily these days because this happens in a summary almost daily these days.
Easy fix (Score:5, Funny)
Create a new cryptocurrency and issue coins in that. It's all just magical belief in crypto fairy dust anyway, so why not just replace one bullshit coin with another?
"Well folks, we've got good news and bad news. The bad news is the USDC is gone, vamoose, it's pinin' for the fjords. The good news is we have something even better! We're replacing your lost currency with TotallyFuckinAwesomeCoin, or TFAC for short. You'll find your TFAC balance shown in your account by tomorrow. Thank you for putting your trust and your money in Binance!"
Re: (Score:3)
You forgot to mention that the TFAC will be a stable coin linked to the Elbonian Eye-crud.
https://dilbert.fandom.com/wik... [fandom.com]
Post-FTX era? (Score:2)
Iâ(TM)m shocked. (Score:5, Interesting)
So it turns out when you give people a load of financial power and zero regulatory oversight, they do stupid shit. Who possibly could have seen this coming?
Re: (Score:2)
Yeah but at least the 'bros aren't burdened by The Man and all those gov't mandated forms and blah-blah-blah documents.
$1.8 Billion? Those are rookie numbers! (Score:2)
Funny how Rumsfeld on 9/10 called out the Pentagon for not being able to account for $2.3 Trillion [youtube.com] dollars and this was "conveniently" forgotten the next day on 9/11.
The Army lost track of $5.8 Billion [archive.org] of supplies between 2003 and 2011. I guess the first year the Pentagon was supposed to be audited, 1996, to account for the $8.5 Trillion was too much annual work. /s
truth (Score:2)
What, you mean they didn't write "spent it on drugs and hookers" into the provided text field?
Who'd have thought?
Daffy Duck (Score:2)
"Oh, oh, very funny. It is to laugh."