Friday, 11 November 2022 20:46

A Binance Cursory Forensic Analysis Considering the FTX Collapse - Uh Oh!!! Featured

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In light of the current events surrounding FTX, Voyager, 2 Arrows Capital, Celsius and BlockFi (among many other centralised trading entities), trust in the crypto market has been deeply affected, and based on our initial understanding of the following factors, the coins BNB and BUSD are considered risky, and the credit quality of Binance cannot be confidently ascertained:

  • It should be noted that the top 10 holders for both coins account for more than 94% of the holding, which suggests that the demand for the coin is low. Notably, of the top 10 biggest holders, Binance holds 97.5% and 93.5% of BNB and BUSB, respectively; This reflects huge concentration risk. Again, Binance mints both of these coins, similarly to FTX and the FTT token.
  • Of USD69.3 billion of the coins held by Binance in total (as far as we were able to ascertain from public sources), coins that they actually mint themselves account for 54.7% (USD37.9 billion), i.e., BNB and BUSD. And considering the concentration risk combined with the fact that they are the world’s largest crypto exchange, they can effectively control the price and hence the (mark-to-market) value
  • Analyzing the recent few transfers made for BNB, astonishingly, Binance made 99.96% of the purchase on significant volume. One more time – the entity that:
    • mints the BNB,
    • controls the largest share of the global crypto trading market,
    • and holds ~98% of the minted BNB (with no backing other than the promise of discounted trading fees on their platform),

likely carries these tokens as assets on its balance sheet to be used as collateral for loans and hypothecation. Think about it! And you thought FTX was bad???

Download our free report to finish reading.  pdf Binance Cursory Forensic Analysis Considering the FTX Collapse…. Uh Oh! (1.77 MB)

 

Read 1246 times Last modified on Monday, 06 February 2023 07:32