Binance Sparks Token Burn Issues

Binance Sparks Token Burn Issues

Binance is never far from controversy and the world’s biggest exchange has once again caused a stir, this time with their latest token burn for Q3. 

In what should have been a good week for Binance as they reached $1 billion US dollar profits in cumulative profit since the exchange’s inception, the news has turned a little sour since their token burn. 

The official statistic from Binance said that the exchange had burned 2,061,888 $BNB (36,798,103 USD), almost the same amount as the last two cycles put together. 

Binance according to its white paper, works out how many tokens it burns from the amount of profits taken from each quarter and the trading volume. 

Therefore, If Binance burns 20% of all its profits this would make it an incredibly profitable past few months. The Block’s Larry Cermak pointed this out claiming Binance had their second highest profit amount since its inception. 

“Since Binance burns 20% of profits, we can deduce that it made approximately $186 million in profit in Q3. This is the second-highest quarterly profit”

But where has this money come from? Binance has made many acquisitions recently but its profits go wildly against the general pattern of the past few months. It also begs another question, how can Binance burn their second highest amount with a low trading volume for Binane and the industry as a whole in previous months?

Binance’s burning decision is made on the basis of trading volume. Yet, Binance’s trading volume for the previous quarter was higher than Q3. The figure below illustrates the lower figures for Q3.

Binance is clearly not holding true to their white paper which says, “every quarter, we will destroy BNB based on the trading volume on our crypto to crypto platform”. How can this be the case for Q3?

The surprising nature of Binance’s burn did not go unnoticed by Cermak who stated on Twitter:

“Binance’s spot volume dried up in the last few months. The market has been dead and yet Binance just burned the equivalent of the second-best quarter in existence.”

The dubious nature of the token burns does not stop there. Another questionable aspect to Binance’s token is the total they are burning. Their white paper states that they will destroy 50% of their circulating supply. Beginning with 200 million BNB and an end result of 100 million BNB. 

Yet, combining burned addresses and current supply shows that Binance has a greater amount than the 200 million BNB outlined in the white paper. The addition of 48,461,324 burned +185,474,825 currently owner = a 233,936,149 total. Is this yet another lie from Binance?

Once again this is another problem in 2019 for Binance.The hack earlier this year, which left the exchange 7,000 Bitcoins worth about $40 million was a bad episode.Then the KYC hack in August, which saw its customers personal details leaked, illustrated Binance’s security issues. 

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