Is Binance the next FTX? - Episode 318 - by cryptohunt.it

Is Binance the next FTX?

What’s worse - lying or simply not mentioning important facts?

Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English - so that you can form your own opinions to be safer out there in the wild crypto space.

Last time we talked about the dangers of having your money parked in a crypto exchange like FTX or Binance: You don't know what the heck they are really doing with your money, and when enough people rush to withdraw, it might turn out that they may have stolen or gambled away some of it.

That's what happened to FTX - but is Binance, the world's largest exchange - next?

Trouble has been on the horizon for Binance: Data shows that customer withdrawals are at a record high. It makes sense: In the wake of FTX, people are realizing that they just can't trust these companies absent of real proof that they actually still have the money.

So - the big question is, does Binance still have all the customers' funds, or did they play with those like FTX did?

Well, it's unclear - and in our book unclear is just not good enough. Binance is using an accounting firm called Mazars to show that they have the appropriate reserves. If the name sounds vaguely familiar - it's the same firm that represented Donald Trump's businesses and had to admit that they can't stand behind decades worth of audits because they never asked the tough questions. Mazars is saying something similar for Binance: That they only did the audit, but can't verify the accuracy of the sources. To which we can only say: What's the damn point then?

And even worse: At least to date, the audit only looks at Binance's Bitcoin holdings, but that's far from all that customers have trusted the exchange with. How much more is there? Well, we don't know. And to make matters downright insulting to you and us, they are using a complicated cryptographic method called Merkle Tree to show those reserves exist - "show" in quotation marks.

And as if this is all not enogh - they also took their audit of Binance offline and announced that they would not work with any crypto company for now. Good thing we downloaded the report before - message us if you want a copy.

You know we don't mice words around here. Do we trust Binance at this point? You can bet your bootie we don't, at least right now. If you have nothing to hide, it's as simple as this: Show us the money. Which they won't. Let's just hope for the best.

And because all this is, honestly, quite discouraging, we’ll turn our attention to some real-world use cases of crypto that are actually a net positive. Because the technology holds so many promises, so let’s not let the news of greed and betrayal drown out our optimism!

This podcast is produced by Cryptohunt.it, the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, design is done by Carmen Rincon, and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.