Small Business Owner Tip: If you’re a finance company and you’re trying to assuage client concerns by publishing liability and asset disclosures, your customers are worried that their liabilities outweigh their assets these days. doing.Need to ensure auditing No In fact, it shows that liabilities outweigh assets. This seems like a basic belt and suspenders, but it’s a mistake you see all the time in the business world.
Here is an example: For virtual currency exchanges, No, for example, two-fifths of the cryptocurrency reserves are self-made coins, revealing that legitimate cryptocurrency reserves (whose terms are arbitrary) are themselves overcollateralized.you should No withdraw $2 billion With assets to prove you have the reserves you say when 25 cents is enough. And even if the accounting firm that undertook the internal investigation qualified the report by saying that it did not even “express an opinion or endorsement conclusion” about the numbers, an increasingly skeptical public You shouldn’t expect to feel safe. This is an awkward position currently facing Binance, the world’s largest cryptocurrency exchange. The timing could be better as a skeptical public turns its attention from the smoldering wreckage of a cryptocurrency company to one of the last major players not yet on fire. I have.
Bahamas-based cryptocurrency exchange FTX’s collapse was so spectacular, full of colorful details and hilarious buffoons, that the whole thing was so massive that a series of conspiracies by Binance could easily go unnoticed. did. Founder of FTX and divine league of legends Player Sam Bankman-Fried surprised the crypto world on the morning of November 8 when he announced that he was selling FTX to Binance. The move sparked a run on quasi-banks that FTX was largely unprepared to cover, as it diverted people’s money to Alameda Research, a loss-making affiliate hedge fund, and grossly over-leveraged its reserves. Binance had planned to take over FTX, but after seeing how bankrupt it really was, he chose to let it die of natural causes.
When such a corporate war erupts between companies that offer what ordinary people can perceive as goods and services, the ones still standing at the end of the day are the ones who move the biggest ones. It can be correctly concluded that the is in an advantageous position. ruined rival. But that logic breaks down here. Because the resource that FTX, Binance, and all other bankrupt or soon-to-be bankrupt cryptocurrency exchanges are fighting over is a steady supply, not wood that can be processed into wood, for example. Ducks trying to make a lot of money in a zero-sum casino game. It’s like a renewable resource, but it’s not an inexhaustible resource.
When things calmed down after Bankman-Fried finally stopped ignoring his lawyer’s advice and blaming anyone who DMed him on Twitter (sadly, he ignored me). , Binance may have found itself in a position to eat up some of the FTX market. A share of suckers trying to make big bucks on zero-sum casino games. However, there was one major problem. It’s just that after FTX died, the prospect of making money or even losing all your money to horrible scams suddenly seemed a lot more suspicious to the public. Where cryptocurrency’s theoretical footing seemed more shaky after the fall of FTX, FTX got enough advertising and good press to become something of a recognizably ordinary brand.MLB If a company big enough to make a name for itself in umpires’ jerseys and NBA arenas was committing fraud as part of its overall business model, then naturally the influence of any particular company would seem less important. increase.
These are the existential issues that Binance sought to avoid in its disclosure, and that the accounting firm that performed the analysis went to great lengths to clarify: No audit. In fact, the scope of the reserves analyzed by South African accounting firm Mothers was limited to Binance holdings of bitcoin. 13 percent of its portfolio. Wharton’s accounting professor told Coin Desk that the report is “less valuable than the Tether or USDC reports.” Fittingly, not to call it an audit raised far more questions than it answered. For one thing, neither Binance CEO Changpeng Zhao (known as CZ) nor anyone else has really said where Binance’s headquarters is located.
That’s a pretty serious deal! The company was founded in China but left the country when the Chinese government banned cryptocurrencies. No one tells you what lies at the heart of a nested series of designed holding and shell companies. Binance has a presence in the United States, but it also has a number of doing business. Their apparent strategy, as revealed in a leaked 2018 plan dubbed the “Tai Chi Document,” is to involve so many different companies and subsidiaries in an attempt to essentially stay outside the scope of regulation. to establish. Reuters reported in September that the Justice Department was investigating Binance for money laundering rumors. Using Binance appears to be one of the primary ways to circumvent international sanctions. Binance lawyers have reportedly already started talking about a plea deal.
The most notable aspect of Reuters’ investigation is the counter-argument from Binance’s legal team to the federal government.
Lawyers at Binance’s U.S. law firm Gibson Dunn have been meeting with Justice Department officials in recent months, according to four people familiar with the matter. Among Binance’s allegations: Criminal prosecution would wreak havoc on an already protracted recession in the crypto market.
Reuters
Again, the specter of regulation is just as bad as regulation itself, because cryptocurrencies are more like financialized systems of faith than fixed security in everything that exists in the real world. It may become there are signs People are starting to pull money away from Binance. No one should be confident that what Binance has publicly disclosed about its holdings will be capable of meeting demand in the event of a severe banking crackdown. As we have shown, nothing is too big to fail in cryptocurrencies.
