The cash outflow from Binance has gotten worse than CEO Changpeng Zhao pointed out last month, and has gotten significantly worse since then, according to Forbes analysis.
B.Inance, the world’s largest cryptocurrency exchange, is struggling to keep its assets. Investors have been pulling out of the cryptocurrency in recent weeks following the collapse of rival FTX, with outflows accelerating despite CEO Changpeng Zhao’s assurances that the situation has stabilized. Customers withdrew a net $360 million on Friday, according to data from crypto data firm Defillama.
On Dec. 13, another crypto data company Nansen news Binance lost $3 billion in assets in the previous week, representing 4% of the company’s total at the time. A Forbes study revealed that, in fact, Binance has lost his 15% of its assets. Twitter post by Zhao (popularly known as CZ) on the same day he downplayed the retraction of the Nansen report. About a quarter of Binance’s assets left the exchange in less than two months.
The lack of investor confidence is best reflected in the performance of the two tokens that the exchange is named after: Binance Coin (BNB) and Binance USD (BUSD). BNB has lost 29% of its value in the past two months, with Forbes estimating that there are around 29 million tokens left in Binance, 51% less than the exchange disclosed on Nov. 10. I’m here. 40%.
There are also more subtle ways in which Binance seems to be losing credibility and influence. While his net worth has fallen 24% since November, investors in well-known tokens such as Matic, Ape and Gala have cut their assets by 40-50% on exchanges.
Asset Change – BINANCE
Assets (Unit: $ million)
What’s in your wallet?
The story could also be related to the lack of conventions for classifying assets held within cryptocurrency wallets. Crypto data companies have yet to agree on what to include in their asset valuations. Especially when there are no standards for what should be included, reported with the deduction of exchange-generated tokens, or whether assets are bundled by the blockchain on which they operate.
Below is a breakdown of how these companies quantify the contents of Binance wallets. Note that Binance’s net decline in assets also includes the sharp rises of his two stablecoins, USD Coin (USDC) and Tether (USDT), in recent weeks.
Binance Crypto Wallet Contents
Assets (Unit: $ million)
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Binance Crypto Wallet Contents – Tokens
Tokens for the units listed below (by data source)
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There is considerable debate as to whether Binance’s BNB (a token whose issuance and supply is controlled by the exchange) represents a genuine asset that can meet its external obligations during difficult times. If possible, data companies disagree about how much value they should attribute to their holdings.
Breaking with the practice of not disclosing sensitive financial information, Binance released a public transparency statement almost two months ago listing some of its crypto assets. At the time, the company included $17 billion in BNB denominated by him, which represented almost a quarter of his assets.
As of today, the BNB price is $262, a third less than it was on November 4th. CoinMarketCap (CMC) is believed to be the closest independent observer has come to the exchange’s official view of his BNB token on its recent balance sheet. The world’s largest cryptocurrency site operated by Binance. However, CMC says it will complement Binance data with data from Nansen and Defillama.
CoinMarketCap’s January 4 BNB figures, attributed to Binance, represent 57 million BNB tokens, representing 31% of the exchange’s total assets. This BNB percentage is higher than any other data company or Binance in his November statement. However, this 57 million BNB is in contrast to the 22-40 million BNB identified by the three data companies and the 16 million BNB identified using the public Etherscan tool Forbes. So I have doubts about its reliability. If the number of CMC BNB tokens is accurate, it also means that most of Binance’s wealth comes from his IOUs littered with crypto pixie dust.
In dollar terms, Glassnode values BNB at zero, while Nansen and Arkham place the amount near $6 billion, and Defillama and Messari see it near $10 billion. However, Messari bundles Binance holdings value across his three chains of BNB, ETH, and Tron. This suggests that around $10 billion in the BNB group is made up of many other tokens, not just BNB.
Forbes also found that Binance’s Bitcoin (BTC) holdings range from $4.8 billion (CoinMarkeCap) to $9.6 billion (CER.LIVE). Thus, the number of tokens held has changed sharply from 287,000 BTC to 577,000 BTC. This is probably because some data companies are erroneously querying instead of searching all Binance wallets. Still, astute observers may wonder how CER.LIVE identified his $9.6 billion in BTC assets on Binance wallet.
The number of BUSD tokens decreased by $8,724 (40%) between November 4th and January 4th. There was general agreement by four data providers (Nansen, Glassnode, Defillama, and Arkham) regarding the number of BUSD tokens Binance holds in its wallet. As of January 4, about $13.468 billion, which is the average of the four data companies.
CoinMarketCap showed a balance of 9.58 billion BUSD on January 4th. This is more than $3.5 billion lower than the $13.1 billion and $13.2 billion announced by Nansen and Defillama, two outside companies contributing to CMC’s BUSD tally, respectively. So this figure is problematic because Binance’s own data would need to be billions of dollars below Nansen and Defillama’s estimates to show an average of $9.39 billion.Of course, the low value of BUSD tokens Things are bad for Binance.
COINMARKETCAP FINANCIAL RESERVES – BINANCE
Forbes estimates that Binance holds 4.49 million Ether (ETH) tokens, using the average of the Ether (ETH) figures of the four data companies mentioned above. This equates to $5,498 million. Conversely, his much lower estimate of $3.3 billion on CoinMarketCap means Binance only has his 2.58 million ETH tokens. That’s 1.91 fewer tokens for him than the Forbes average. Messari’s ETH estimate (worth $28.6 billion) represents all tokens running on the Ethereum chain, not just those held on Binance running on the Ethereum chain. and is in its own league. This discrepancy is significant. This means that CoinMarketCap says Binance holds 2.6 million Ether tokens, compared to his 4.48 million to 4.85 million tokens by all other data sources and Binance itself.
Defillama data shows steady decline in BUSD holdings, with significant drops (by at least $1 billion) on Nov. 25 and Dec. 14, the latter of which CZ issued a sobering statement on Twitter. The next day. In this second of his BUSD plunges, he has lost as much as $3.46 billion in just one day. On Binance, on January 4th, he doubled in USDT and USDC tokens at the same time, making him $6.27 billion in total.
BINANCE – Select Change for Stablecoin Holdings
Change in holdings since November 12 ($ million)
These abrupt and synchronous changes suggest that one or more large investors exchanged BUSD for rival stablecoins USDT and USDC.
The story behind the massive BUSD sale and rising USDC and USDT holdings is that many crypto market makers, including Jump Crypto and Wintermute, withdrew large sums of money from Binance prior to December 12th. is related. Do the same silently.
Arkham Research reported that Tron founder and Huobi exchange owner Justin Sun took to Twitter on Dec. 13 to show others that investing in Binance is safe. , but did not disclose subsequent large-scale withdrawals. In a tweet the next day, arkham research “In the last 24 hours, this Paxos deposit address has seen inflows of over 200 million BUSD, all from Binance.” It suggests that you have a high potential.”
On Jan. 6, Coindesk said there was “drama” going on at Sun’s Huobi exchange after laying off 20% of its workforce and demanding the remaining employees accept payments in USDC and USDT. Reported. arkham research Examination of Justin Sun’s unusual transactions in the ledger concludes that he may have lost a key banking relationship, making it difficult to send large amounts of money or even pay his foreign employees. Tagged. Sands stablecoin The USDD has fallen this week but is trading at 97.6 cents. This is certainly below the dollar peg, but within the deviation levels we have seen many times over the past year. Sun’s influx of funds, as usual, took to Twitter to cast doubt on his CZ, who downplayed the funds for boosting his Tron activity on Binance, but later deleted the tweet. Investor.
It is worth noting that Binance has been operating without a Chief Financial Officer since Wei Zhou abruptly left the company in June 2021. This has raised fears that CZ is looking to purchase assets with money that no one is sure is his own. It is not surprising that a shortage of key treasurers led to audit firm Mazars’ abrupt decision on Dec. 19 to stop the reserve proof analysis it was conducting for Binance.Blockchain records viewed by Forbes show Binance Wallet sent $232 million in BUSD Tokens to Binance US Wallet on December 31st, significantly increasing funds available on Binance US and presumably convincing Binance US to acquire Voyager assets. I was able to show the US regulators that they are not.
Forbes has reached out to Paxos, an organization licensed by the U.S. Banking and New York Department of the Treasury, with questions about BUSD’s activities, but declined to comment. Instead, I issued a short public response stating that “on December 13th he made a firm statement on BUSD” and referred me to the latest report on Etherscan’s website and her BUSD information. rice field.
Etherscan identifies wallet addresses believed to be owned by Binance, such as “Binance 8” and “Binance: Binance Peg-Tokens”. They hold 38.1% and 32.4% respectively of all BUSD issued. Binance 8 wallet has seen him with $100 million in assets in early 2021 and $15 billion in mid-November 2022, but has seen around 9 billion BUSD tokens drained over the past three weeks. I was.
ETHERSCAN ACTIVITY ON “BINANCE 8” BUSD WALLET
1 billion token balance
Modifying Assets Elsewhere
While it can be argued that the decline in assets Binance is experiencing is similar to most exchanges, Defillama data shows that 23 competitors with publicly available proof of funds information in the last 30 days. It shows that only one of the companies is a lesser known company. An exchange called MaskEX has lost more than 15% of assets to Binance.
This situation shows that there are trust issues with Binance, and its status as the largest crypto market increases the likelihood of contagion if they prove well-founded. , it is not necessarily a doomsday scenario for digital assets and activity could easily shift to other markets around the world.
Changes in asset holdings
Holdings as of January 4, 2023 ($ million)
Points for investors
The bottom line is that more and more Binance investors are leaving the exchange or significantly reducing their exposure to the exchange. This sharp drop has occurred at a steady pace without much media attention or market reaction. The significance of this story is that, by its own inertia, Binance is approaching a precipice where this weak move for the bank could intensify.