Binance FUD: What you need to know 🤔
Plus, which big brand fumbled their NFT launch?
GM friends and TGIF. Welcome back to Web3 Seems Legit, your source for all the crypto FUD and more. This week, we’ve got a whole laundry load of FUD to unpack, so let’s get started .
In this issue:
- Binance gets flooded with FUD. Another week, another Binance FUD. What’s it about now?
- Porsche fumbles its NFT launch. Have fun staying poorsche with these NFTs.
- In other news: a $2 million NFT phishing attack and bullish Amazon rumors.
Binance gets flooded with FUD
FUD is an interesting thing because it’s neither your friend nor foe. They’re like self-destructive thoughts that want to protect you but also tends to lead you towards your own downfall.
With the help of FUD, FTX was taken down, along with Celsius, Nexo and Genesis. But there’s one opponent that it still hasn’t been able to beat—Binance, the world’s largest crypto exchange. In the past few months, Binance has been repeatedly hit with insolvency and federal investigation rumors. Inspite of it all, it has continued to pass the stress test and stand firm in its place.
But FUD rarely backs out of a fight. Since taking down Genesis, the attention has shifted back onto Binance with a fresh load of rumors to unpack. Let’s dig into it.
1/ Bitzlato x Binance
Last week, the US Department of Justice (DOJ) cracked down on a Chinese-based crypto exchange, Bitzlato for money laundering, among other financial crimes. It quickly became a laughingstock in the crypto community because of how small the Bitzlato fish is compared to others in the pond. In fact, some thought Binance was the one the DOJ would go after.
In some ways, it did. Shortly after the Bitzlato news broke, it was revealed by Chainalysis data that Binance processed over $346 million for the criminal exchange. In fact, Binance was among the top counterparties to interact with Bitzlato. Others included Hydra (a darkweb marketplace) and Finiko (an alleged crypto ponzi scheme).
Binance received $52 million worth of dirty money from Bitzlato. Since Binance is already under investigation, this will give authorities room to say it failed on its AML Policy.
— Sasha Hodder (@sashahodler)
Jan 23, 2023
While it’s certainly not a good look for Binance, it also wasn’t the only exchange to interact with Bitzlato. It just so happened to be the largest.
Criminals sent dirty money to multiple crypto exchanges for money laundering
Binance was the final destination for millions in funds from Bitzlato, exchange shut down for alleged money laundering
Binance is a money-laundering engine
Ignore the FUD. '4'
— Ki Young Ju (@ki_young_ju)
Jan 25, 2023
Is the Bitzlato attack actually a way to target Binance? Was Binance in on the money laundering scheme? What will happen to them now? So many questions, but that’s still not the end of the FUD.
2/ Binance commingles funds
Hearing the phrase “commingling of funds” is now the biggest nightmare for any investor. In the last three months, we found out that FTX/Alameda and DCG/Genesis were mixing their assets together like a poorly blended smoothie.
Now it looks like Binance is also acknowledging that the management of their funds “has not always been perfect”.
Tl;dr Binance admits to “mistakenly” keeping collateral for Binance-peg tokens (B-tokens) and other company assets in the same wallet. Let’s break this down.
Mixing customer assets and reserve tokens in the same wallet is no minor mistake
"Reserves for almost half of the 94 coins that #Binance issues, known as Binance-peg tokens or “B-Tokens,” are currently stored in a single wallet called “Binance 8” which also holds customer assets"
— Yoda Research (@YodaResearch)
Jan 24, 2023
Firstly, what are B-tokens? B-tokens are Binance’s version of a wrapped token that is meant to be backed by 1:1 reserves of the currency they represent. Wrapped tokens give you the flexibility to move your tokens from one blockchain to another and expand its utility.
To provide transparency, Binance posts their proof of reserves, which includes the wallet known as “Binance 8” that holds the collateral backing B-tokens. However, according to on-chain data, Binance 8 wallet was holding more collateral than needed at the time.
Here was Binance’s response to Decrypt:
The funds were either “not moved quickly enough to the appropriate hot wallets” or “collateral assets had been stored in cold wallets that were not known to the public.”
Either way, they’ve admitted that customer funds and B-token collateral should be kept separately. This makes us wonder what other poor fund management or commingling could be happening at Binance…🤔
3/ Binance gets cut off from their bank
Are you still following? Great, because there’s more. Last week, Binance announced that Signature Bank, one of their banking partners, will no longer process transactions under $100,000 to decrease its exposure to crypto.
According to Binance, only 0.01% of Binance’s monthly users are served by Signature Bank, so no biggie, right?
signature bank will only allow rich people to invest in crypto
— Mike Dudas (@mdudas)
Jan 22, 2023
Not quite. FUD quickly began to circulate that this is not just a Signature Bank issue, but the entire SWIFT network that allows financial institutions to move funds internationally may be affected.
This isn't a SWIFT decision. Signature Bank NY is refusing to process SWIFT transfers of less than £100k to and from crypto exchanges, including Binance. twitter.com/davidgerard/st…
— Frances 'Cassandra' Coppola (@Frances_Coppola)
Jan 22, 2023
If this were true, this would impact all SWIFT bank account transfers to crypto exchanges. So it’s a good thing that the SWIFT rumors aren’t true, but it doesn’t mean that Signature Bank’s decision won’t impact other banks.
So that’s Bitstamp, Bithumb, Binance, eToro, Huobi, Kraken (Payward), Nexo, OKX all cut off from Signature Bank.
If SBNY is doing this, expect any remaining banks to do the same.
GOOD LUCK. twitter.com/tier10k/status…
— DIRTY BUBBLE MEDIA: THE WALLED GARDEN (@MikeBurgersburg)
Jan 22, 2023
What do you think? Is all the FUD against Binance targeted, or is there some truth to the claims?
Psst, pro tip: get a cold wallet and you won't have to worry about which crypto exchange or platform to trust with your assets.
Porsche fumbles its NFT launch
From Nike to Adidas to Starbucks to Reddit, plenty of major traditional brands have taken their first step into web3 through NFTs. While some have been successful in the launch, others have not been, such as Porsche.
The luxury German automaker was originally set to launch a collection of 7,500 NFTs that would give holders access to exclusive events and merchandise. It’s typically a bullish sign when a big brand makes a move into web3, but in this case, the excitement quickly faded when the mint price was revealed.
The iconic 911. Not only a number – a legacy. Unveiling our mint price of 0.911 ETH.
— PORSCHΞ (@eth_porsche)
Jan 20, 2023
To commemorate the classic Porsche 911 model, they thought it would be clever to price the NFTs at 0.911 ETH, about $1,500 USD at the time of writing. The problem is that the crypto community didn’t think it was worth it. Within the first day of launch, only 1,500 of the 7,500 NFTs were minted.
This is a pristine example of a large brand trying to extract liquidity from the community without onboarding itself into Web3.
Porsche had a .911 mint, in a bearmarket, for 7500 pieces. Of course it failed. Next to no marketing, trying to raise on prestige alone. twitter.com/eth_porsche/st…
— camol (@camolNFT)
Jan 24, 2023
With little demand and secondary sales price dropping below the initial price, Porsche quickly responded by stopping the public mint and limiting the supply. This shot the price up temporarily to over 3 ETH, but its reputation was already tarnished.
Porsche launches a NFT project with a 0.91 mint price
Gets fudded and doesn't mint out
Porsche cuts supply
Floor price is now 3.3
— AshRobin 🐶 (@ashrobinqt)
Jan 25, 2023
So what went wrong with the Porsche NFT launch? Why did it fail so miserably? For one, it was overpriced, especially in a bear market. Secondly, they were targeting the wrong community. Rather than go after web3 natives, their strategy should have been to target their loyal web2 Porsche fans and help them seamlessly onboard to web3, similar to Reddit’s approach.
We all know by now porsche NFT didn't do as well as expected,
Most people say it's because of the .911eth mint price,
Reality is, Price wasn't't the issues.
The real issue was:
— Rohan🧢 (@Rohan_0g)
Jan 24, 2023
If Porsche truly understood the web3 community, they would know that degens love a good meme. To parody the failure of the luxury automaker, Poorsche, a meme NFT appeared in the market.
Who did it better? Poorsche or Porsche? Only one of these two projects sold out.
— NFTstatistics.eth (@punk9059)
Jan 25, 2023
No utility, no reason. That’s web3 for you. Have fun staying Poorsche.
Picked up the Poorsche Meme for two reasons, both serve a great purpose:
1) I would love to see the floor of this rise above the Porsche NFT.
2) If/ When it goes to zero, it will remind me what happens when I ape into memes with zero research.
— Slam Diego Zoo (@SlamDiegoZoo)
Jan 24, 2023
In other news
High-profile NFT influencer loses $2 million worth of NFTs by signing a malicious Seaport bundle on OpenSea.
Kevin Rose was just lost $2m+ in assets by signing an off-chain signature that created a listing for all of his OpenSea approved assets in one go.
While seaport is a powerful tool, it can also be dangerous if you're not aware of how it works.
A bit of context 1/🧵
— quit (@0xQuit)
Jan 25, 2023
Big win for crypto: Amazon is rumored to be launching an NFT initiative soon to over 200 million users.
NEW details on Amazon's big, brewing NFT push:
— Teaming up w/ L-1s & exchanges, plus blockchain gaming companies
— AMZ's Web3 ambitions & end goals
— What it all means for crypto ... If: "they execute and do this right and are smart about it.”
— Michael Bodley (@michael_bodley)
Jan 26, 2023
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