Binance, the world’s largest crypto exchange, has made many puzzled faces and causes for concern with their latest token burn for Q3 in 2019.
Various insiders and crypto analysts were somewhat shocked when the statistics for Binance’s token burn were released. The exchange burned over 2 million BNB, which was the equivalent to around $36 million dollars.
The large amount burned is almost the same amount as the previous two cycles of 2019 combined, only adding to the surprise of commentators at the token burn.
Binance determines how many tokens it burns by the amount of profits taken for each quarter and trading volume. If Binance burns 20% of all its profits, means this latest quarter must have been a good one.
The Block’s Larry Cermak certainly thinks so, claiming Binance had their second highest profit amount. His tweet said:
“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”
Many have seen this burning as a signifier of the many successes of Binance, but others have called into question the validity and sincerity of the burn. How can Binance burn so much despite the dip in trading volume across the industry this past quarter?
Binance burn may not be all it seems?
As previously mentioned, much of Binance’s burning decision is made on the basis of trading volume. However, this also causes some bemusement as Binance’s trading volume for the previous quarter was higher than 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.”
Binance it would seem are not sticking to their white paper which states, “every quarter, we will destroy BNB based on the trading volume on our crypto to crypto platform”. The exchange is clearly making up the rules as it goes along, illustrating a lack of genuinity.
The shady nature of the token burns does not end there. Another troubling aspect to Binance’s token burning is the amount they are actually burning. Their white paper claims they will destroy 50% of their circulating supply, with a starting point of 200 million BNB and an end result of 100 million BNB. However, some adding up of their burned addresses and current supply reveals that Binance has more than the 200 million BNB they had stated in the white paper. The formula being, 48,461,324 burned +185,474,825 currently =233,936,149 total.
Clearly, this is yet another incident and PR disaster for Binance. This is on top of the hack earlier this year, which left the exchange 7,000 Bitcoins worth about $40 million out of pocket. Partner that with the KYC hack in August, which saw its customers personal details leaked, perhaps Binance and security do not go hand in hand. Now with these less than squeaky clean token burns, the reputation of Binance is on the line.