🐻 Binance FUD: What you need to know 🤔

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). 

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. 

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.

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:

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?

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. 

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.

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. 

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. 

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. 

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.  

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.

No utility, no reason. That’s web3 for you. Have fun staying Poorsche. 

In other news

High-profile NFT influencer loses $2 million worth of NFTs by signing a malicious Seaport bundle on OpenSea.

Big win for crypto: Amazon is rumored to be launching an NFT initiative soon to over 200 million users.

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