I love some good exchange fud but this article is hot garbage. None of the claims remotely follow from the evidence.
* all exchanges transfer a lot back and forth on behalf of their clients. Arb desks, market makers, etc. To conclude commingling is laughable.
* binance international has many different products and clientele (much more retail and people with positions) than binance us (mostly just hfts, little real world traction). No surprise that the turnover to assets is different. It doesn’t mean that trades awe executing in binance international instead of US.
* binance saying some market makers have headquarters outside the US does not mean binance us trades actually happen on binance. This is so horribly, terribly wrong it makes me doubt the article is good faith.
* A market maker isn’t a pair of address that move funds back and forth, unlike the article claims.
The claim doesn’t even make sense. Binance US trades hundreds of millions a day, and the lifetime back but forth transfer is under 2 billion??? That doesn’t add up to “binance us does it’s trades in binance international”.
The claim doesn’t even make sense. There’s no reason to send funds over to binance international, do the trade for each party there, and send funds back. If the claim is that a market making firm does so then, yeah sure, many do, so what? That’s literally how cross exchange arb works, “but in the low one and sell on the high one”.
Let’s keep the content of a respectable quality. This is someone putting out some garbage so if binance does collapse, they can claim they called it ahead of time.
I have no dog in the fight, but I did find it interesting that the top comment on HN for the Alameda article written by this very exact author was very similar in tone completely dismissing the article and saying it's total nonsense, and that the author knows nothing. As we all found out a few days later, the article was 100% on the nose. So reasonably, it seems we HN readers would have to take the total outright dismissal of this article with a grain of salt...
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nobody knows what the liabilities are. At one extreme, if the liabilities are all cash, alameda is in a dire place. At the other, if the liabilities are just the tokens on their balance sheet, there's nothing particularly interesting.
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Is obviously not a total dismissal - I’m on mobile so can’t scroll around to find my other one but it largely says the same thing.
Also, if you can’t really imply anything other than “I’m a shill because I said the balance sheet wasn’t certain evidence of insolvency”, what’s the point? Shill accusations are explicitly called out by dang and the rules for this reason
Never implied that you are a shill at all. Just that I have noticed a common theme on HackerNews where people tend to comment as if they "know it all" (and maybe you do, how do I know). I just want to make aware that this article writer has earned credibility, and as a layman I am much more willing to put a higher weight on the article than a rando taking it down and calling it garbage based on what doesn't seem to be any special insight into the situation.
This is the same reporter who warned investors about Alameda/FTX right before they collapsed. [0] [1]
They also brought attention to Celsius two months ahead of their collapse. [2]
A lot of crypto ponzi schemes have been covered up with "Oh, that was just us doing arbitrage."
Celsius founder in 2020:
"We lend financial assets to players that can transact and generate income for themselves through arbitrage, market making or shorting certain stocks or digital assets."
Almost every brilliant arbitrage has blown up in the faces of high-risk entities or never happened to begin with (SBF's Japanese arbitrage trade looking pretty suspicious right now, with a $9B hole in his balance sheet).
The confidence of your remarks also strikes me as strange, seeing as we've now experienced one domino after another of "we're perfectly solvent and not doing anything bad" to "we're closing withdrawals and all the money's gone" (LUNA/UST, Celsius, 3AC, Voyager Digital, BlockFi, Genesis, FTX... all just in the last year.)
How can you have so much confidence these trades aren't suspicious?
1. Securities exchanges have a well-defined process for clearing transactions, and don't receive off-schedule payouts from ostensibly independent entities in order to make those transactions work out.
2. If Binance goes under, what happens to the holdings of Binance.US customers if they are depending on transactions debited from Binance? It's not about clientele, it's about where the assets are parked.
3. You have the article's causality chain backwards. They establish the hypothesis first and then note that offshore market-making (noted in the Binance.US TOS) supports the hypothesis.
4. The article puts "market maker" in quotation marks, implying that it's not a real market maker but rather a vehicle to move funds to the other entity for the purpose of effecting trades. I interpret this as a no-arbitrage condition between the Binance and Binance.US.
5. The amount of money is irrelevant. If your assets are deposited in a regulated entity and then they get transferred to an unregulated entity for any reason aside from clearing your own transactions, something strange is going on.
6. Cross-exchange arb shouldn't result in USDT deposits on Binance.US dropping to six figures and then needing a $10M lifeline from Binance.
7. This "someone" as you put it was fairly prescient with regard to Alameda and FTX, using similar methodology, and faced similar criticism for the four or five days between their publication and the collapse of the FTX empire.
I think the article was suggesting that the volume of trading exceeded the store of assets on Binance.US and as such required funds be transferred from Binance proper because it had a much better volume:exchange ratio.
Right - and the Binance.US TOS tries to maintain that they are not related parties with Binance even though they share common owners:
As part of an effort to offer digital asset trading technology to its customers through the Binance.US platform, BAM Trading entered into licensing agreements with Binance Holdings Limited ("Binance"), which operates the world’s largest digital asset exchange. BAM Trading and Binance share common majority ownership, but are not within the same corporate structure.
* all exchanges transfer a lot back and forth on behalf of their clients. Arb desks, market makers, etc. To conclude commingling is laughable.
* binance international has many different products and clientele (much more retail and people with positions) than binance us (mostly just hfts, little real world traction). No surprise that the turnover to assets is different. It doesn’t mean that trades awe executing in binance international instead of US.
* binance saying some market makers have headquarters outside the US does not mean binance us trades actually happen on binance. This is so horribly, terribly wrong it makes me doubt the article is good faith.
* A market maker isn’t a pair of address that move funds back and forth, unlike the article claims.
The claim doesn’t even make sense. Binance US trades hundreds of millions a day, and the lifetime back but forth transfer is under 2 billion??? That doesn’t add up to “binance us does it’s trades in binance international”.
The claim doesn’t even make sense. There’s no reason to send funds over to binance international, do the trade for each party there, and send funds back. If the claim is that a market making firm does so then, yeah sure, many do, so what? That’s literally how cross exchange arb works, “but in the low one and sell on the high one”.
Let’s keep the content of a respectable quality. This is someone putting out some garbage so if binance does collapse, they can claim they called it ahead of time.