On-chain data shows that Binance’s financials are a ‘black box’, according to Nansen analyst. The analyst acknowledges that the largest Bitcoin exchange may be ‘enormously well-capitalised’. However, he notes that it is still heading towards financial uncertainty.
According to Nansen analyst, this Bitcoin exchange is a ‘black box’
An analyst from data analytics firm Nansen has been critical of the financials of Binance, the largest Bitcoin exchange. The analyst admits that the stock market may be ‘enormously well-capitalised’. But he says his financials are still ‘largely a black box’. Andrew Thurman points out that the exchange has published that it holds $55 billion in customer deposits on-chain. Despite that, “we don’t have much on-chain or any financial access to their assets,” he says. So it implies a lack of transparency.
As you follow on Kriptokoin.com, Binance witnessed a serious outflow of money in a short time last week. In 24 hours, a large amount of funds, such as about $ 6 billion, came out of the Bitcoin exchange. After that, Binance came under the media microscope. According to Nansen’s analysis, Jump Trading, a leading trading firm in the ecosystem, was among the largest organizations to carry funds from Binance.
“Reserve proof doesn’t give us the full picture”
Thurman says Jump Trading could be a way to use BUSD issued by Paxos, an exchange licensed by the New York State Department of Financial Services. Meanwhile, Binance became one of the first exchanges to publish proof of reserve. Later, his supervisor wrote a report on the Mazars Bitcoin exchange’s proof of reserve. However, he withdrew his report after it received criticism for being rather inadequate. Even so, Thurman says it’s difficult to pinpoint the financial health of the stock market. Thurman explains:
In short, you can’t tell whether users can see their obligations to the exchange’s supposed $55 billion in assets. Proof of reserve doesn’t give us the full picture. This is not a complete control.
“We have no idea about these matters!”
Andrew Thurman says it’s still unclear whether Binance’s native token, BNB, will suffer the same fate as FTT, the bankrupt FTX’s native token. “As before FTX stopped withdrawals, you should see around $12 billion in net outflows for Binance,” the analyst says. According to Thurman, it’s clear that BNB is very popular on-chain and there is real activity there. However, the analyst says, “We have no idea what Binance’s obligations are or how BNB plays a role in that.” He also notes that what is known is that at least $18 billion of the $55 billion reserve is stacked in Paxos.
“Even if you deduct the total value of all the various digital assets Binance owns, we know there is at least $18 billion in real dollars out there,” Thurman says. Meanwhile, the analyst is relatively unconcerned about reports of streaming between Binance and its American subsidiary. In this regard, he says:
In my personal opinion, some of these transfers between Binance and Binance.US, the noise around them is a bit exaggerated. Transfers between exchanges are not uncommon. Especially if it’s a market maker that moves large amounts of stablecoins.