What is the "Clawback process" and could it add to Binance's troubles? - Episode 319 - by cryptohunt.it

What is the "Clawback process" and could it add to Binance's troubles?

Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.

Today, in yet another episode about the shaky ecosystem of cryptocurrency exchanges and related companies, we take a look at the process of "clawback" and what impact it could have on Binance.

When a company files for bankruptcy, the goal is to hand the business over to independent leadership so that they can make sure that the money the company owes is paid back.

But a bankrupt company is rarely in trouble because it still has lots of money in the bank - and so, in practice, the bankruptcy administrators' main job is to figure out what's left, and pay down the debts according to a priority list. They are essentially just trying to pay back as much as they can.

That's where the clawback comes in. It's a legal way to demand money back from those that a bankrupt company may have recently paid. Makes sense if you think about it: Say you just bankrupted a company: You could just wire yourself or those companies you like money right before declaring bankruptcy, instead of doing the right thing.

And that's where Binance comes in: You may remember that it was FTX's first investor. Eventually they got out because FTX turned into a major competitor - and Binance got paid partially in FTX's now-collapsed FTT cryptocurrency. Now there is talk that $2.1 billion dollars of that may be demanded back. Listeners of the previous episode will realize: That's even more of a hole in Binance's accounts than they may already have.

So yes - there is more trouble on the horizon for Binance! We'll keep you updated as things develop.

But in the spirit of the holidays, we'll spend this week talking about some cool blockchain apps that are doing their job better than their old-school counterparts... First up: Mastodon, a Twitter killer.

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.