, , ,

Critical Binance Report from Glassnode

As Changpeng Zhao, CEO of the giant cryptocurrency exchange Binance, tries to calm the crypto community on Twitter about their financial situation and withdrawals, it looks like Binance FUD will remain in existence for a while. While the Binance CEO reassured clients that their funds are safe, he claimed that these “stress tests” actually help them build trust with their clients and the cryptocurrency community. On-chain data also indicates that Binance did not behave like the crashed cryptocurrency exchange FTX, although there seems to be some uncertainty.

On-chain data provided by Glassnode on cryptocurrencies held by the crypto exchange Binance indicates that the total Bitcoin holding is 584.6 thousand BTC. Whereas, Binance declared that there are 359.3 thousand BTC in its self-reported Proof of Reserve (PoR) wallets. The difference is over 200k BTC, which is a huge difference. The value of BTCs, whose current prices are not reported, corresponds to approximately $ 3.5 billion.

The on-chain data Glassnode shared for Binance’s Ethereum assets is the same as reported by the cryptocurrency exchange as proof of reserve: around 4.65 million ETH. This shows that Glassnode’s data matches the ETH assets reported in Binance’s PoR and that the heuristics used work as intended by the Glassnode team.

On the other hand, on-chain data reveals extremely high volatility in Binance’s exchange balances throughout December. This is due to speculation that the FUD surrounding Binance is facing an FTX-like situation. As a result of these speculations, it was seen that some users had largely withdrawn their crypto money from the stock market.

On-chain Binance’s Bitcoin Deposit and Withdrawal Volume data shows significant BTC outflows over the past few days. The cryptocurrency exchange recorded the largest net outflow of 57.3k BTC on December 13. On November 9, when the FTX crisis broke out, the largest net outflow of 61.4 thousand BTC was recorded from Binance.

ETH flows on Binance are also more stable and relatively ‘typical’ compared to Bitcoin. Ethereum Deposit and Withdrawal Volume data saw massive single-day outflow of 456.7k ETH on December 13. At this point, it should be noted that after the bankruptcy of FTX, there has been a shift towards self-hiding in the crypto money market.

The most controversial part of the FUD surrounding Binance is about stablecoins. The cryptocurrency exchange has seen nearly $3.2 billion in combined exits of USDT, USDC, BUSD and DAI over the past 30 days. Glassnode reported that the total outflow from all cryptocurrency exchanges was $4.8 billion. This means that Binance accounts for 66 percent of stablecoin outflows, in line with its market share.

As cryptocurrency exchange balances and proof of reserve are a nuanced issue, the biggest challenge of PoR is that it requires reviewing both on-chain assets and off-chain liabilities. Binance currently owns approximately $40 billion worth of Bitcoin, Ethereum, and ERC-20-based tokens.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.