December was a terrible month for Binance.
Even as the exchange attempted to fashion order in a chaotic cryptocurrency ecosystem erupting with scandals daily, Binance found its own house unraveling.
Investors are reported to have converted their holdings of Binance’s stablecoin BUSD to Tether’s USDT and Circle’s USDC. [There is a comment to be made here about the intelligence about said investors, but I shall keep my mouth shut].
The price of Binance’s native token BNB also fell by roughly 18.3% in that month. The prices for Bitcoin and Ethereum, two other key components of Binance’s overall asset mix, also declined.
Watch the Numbers Wheel in Crypto
All of this means that Binance’s assets under management plummeted in December. By what percentage did they decline?
Let’s spin the wheel.
Data from crypto analytics firm Nansen pegs the decline at 11%. Defillama, Arkham, and Messari put the figure at 19%, 15%, and 12% respectively. Glassnode states that Binance lost 19% of its total assets in December. There is also no agreement on the total number and composition of assets at Binance.
According to Coinmarketcap, a data service owned by Binance, Binance’s assets are worth $49.7 billion right now. Nansen bumps up that figure to $56.4 billion.
Coinmarketcap also tells me that 83.3% of Binance’s total asset count is floating in other assets – BNB, BUSD, USDT, and Others. Totaling token allocation percentages for the same assets at Nansen leads me to 76% approximately, meaning the same tokens comprise a relatively less percentage of Binance’s asset mix.
More Problems and Inconsistencies
There are other inconsistencies and problems.
Forbes points out that the figure for BNB’s supply in token supplies in Binance’s wallets on etherscan – a public tool – does not add up. “If the CMC (Coinmarketcap) BNB count is accurate, it also means that that a great portion of Binance’s wealth comes from IOUs of its making sprinkled with crypto pixie dust,” the publication tool.
Unfortunately, the same article mistakes Binance-peg BUSD as BUSD. The former is a derivative which circulates on unregulated platforms as BUSD and multiplies claims on the stablecoin’s limited numbers. BNB is in a similar position. Ninety percent of the token is staked, and those tokens have created a galaxy of derivatives that can bring down its house of cards anytime.
There’s also the fact that around 17% of Binance’s tokens reside on blockchains that have been hacked many times before. It is not clear how Binance has managed to keep up numbers for its tokens, including those for BNB – whose supply is supposed to decline with time, at these chains.
Does This Matter?
Do any of these adjustments and inconsistencies matter? Probably not.
We are talking here about pretend money – arcade tokens – with zero utility outside of the cryptocurrency ecosystem. Some, like Tether and Bitcoin, may have converted that pretend money into real fiat currency but most tokens at Binance are circulating in a crypto netherworld.
These snapshots of Binance’s assets matter only in the context of the exchange’s survival. The math pertaining to BNB and BUSD does not add up and they comprise roughly 34% of the tokens circulating there, based on Nansen data. If they fall, Binance falls.
GBTC Discount Decreases
Yesterday was the deadline for the Digital Currency Group (DCG), a crypto investing behemoth with interests in trading, infrastructure, and mining, to respond to Gemini’s Cameron Winklevoss’s letter re: its relationship with cryptocurrency lender Genesis. Gemini’s Earn program uses Genesis as a partner for yields.
The plot lines in Winklevoss’s letter are familiar crypto territory – commingling of funds, massive debt, and hapless retail investors who seem to have lost their life’s savings in crypto’s house of cards.
The story might be credible if Gemini had not claimed earlier that it had “vetted” Genesis through a “risk management framework” when it launched the program in 2021. Also, what Winklevoss characterizes as a loan from Genesis to DCG might have been an investment from the latter company into the former.
GBTC price seems to have disregarded Winklevoss’s warning shot. The discount of bitcoin price to the trust’s shares fell after prices for bitcoin and other cryptocurrencies rallied. That still isn’t good news for investors trapped in the trust because the discount is still negative.
Grayscale, the company behind GBTC, is still raking in good money from the fees that the trust brings in as management fees even though the asset it claims to hold in its vaults is on oxygen.