3/2/2023: Binance's Shady On-Chain Behavior
~$1.8B randomly moved from Binance-Pegged Token Contract
According to a Forbes investigation, Binance transferred ~$1.8 billion in stablecoin collateral to hedge funds, including Alameda and Cumberland in August last year, leaving the assets on the BNB chain undercollateralized . The Forbes article is paywalled but this Coindesk article has a pretty good recap. The tl;dr of this story is that Binance abused its privilege and moved money out of the bridge contract that was supposed to back the coin reserves on the BNB chain. The money was sent to wallets owned by crypto hedged funds including Alameda Research who later collapsed.
Well, Binance’s shady behavior was pretty consistent. As previously reported, Binance was caught air minting Binance-pegged BUSD on the BNB chain without actual reserve of BUSD on the ethereum chain. This time they get caught transferring reserves out of the bridge contract on the ethereum chain without burning the tokens on the BNB chain. Binance is either incompetent or complacent!! Do they really think people won’t notice their shady behavior? All these shady transactions are recorded on-chain, immutable and can be viewed by the public. I actually did find the ~$1.8B transaction on etherscan and I can confirm the claim from the investigation has merit and Binance’s behavior is unethical and probably illegal. All the warning signs are in plain sight and users who still have a large sum of money on Binance only have themselves to blame if they later lose money.