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Why Binance is Fucked
The FTX collapse left behind data that can be analyzed to predict future failures. One of those future collapses being tracked and reported on right now is Binance. Binance is now halting customer withdrawals for specific tokens.
Three weeks ago, things became obvious when Binance sponsored Ronaldo for an NFT collection. In the commercial, Ronaldo yelled, “to the moon!”. Then Binance did a sponsorship campaign with Messi. Remember Tom Brady and FTX? This is on a larger scale than that, and Binance has spent over 500 million dollars on influencer marketing.
Many of Binance's funds are in BNB, BUSD (their stablecoin), USDT and USDC. If the value of their token, BNB, or stablecoin collapses, they will be at high risk of shutting down like FTX. And it can happen. Remember the Luna stablecoin UST?
Binance's founder ("CZ") has been tweeting sporadically for the last few weeks, trying to prevent people from panicking and pulling money off his exchange. There is a bank run going on on Binance. A bank run is when everyone that uses the same bank tries to withdraw simultaneously. Instead of refunding customers, the bank declares bankruptcy and keeps the money. If the bank wasn't collateralizing customer funds, it could give everyone their money back. Unfortunately, that was not the case for many banks in 2008, FTX or Binance today.
CZ is now lying on Twitter, saying Binance can't withdraw funds for specific customers because a bank is closed, and they need to wait for it to open back up. It was immediately debunked. He is just buying time for whatever he needs behind the scenes. Exchanges like Binance have 24/7 channels with banks they use through third-party services. Customers withdraw funds all the time…
You can watch it unfold as he lies to his followers on his Twitter account here.