🐻 Is Binance passing the FUD stress test?

This is Web3 Seems Legit, the weekly crypto newsletter that keeps you on your toes, like how Elon Musk is managing Twitter. Now that he’s out of the picture, should someone in crypto Twitter take over as Twitter CEO?

In this issue, we’re digging into these latest crypto topics:

• Are proof of reserves reliable?

• Is Binance buying Voyager good or bad?

• How did Trump’s NFT collection perform?

1/ Are proof of reserves reliable?

Another week, another piece of Binance news to FUD about. This time, it’s more about their proof of reserves (PoR).

But first things first, let’s understand what this “proof of reserves” thing is really about.

A proof of reserve is a way to verify if an institution, like a crypto exchange, has enough funds in its account to back its user’s assets. Note that crypto exchanges are supposed to hold user assets 1:1. FTX failed because it didn’t.

However, PoRs don’t really show the full picture without proof of liabilities. What we really need to see is net assets (amount in reserve minus liabilities). Binance refused to show their liabilities, drawing much criticism from several folks, including Jesse Powell (Kraken) and former SEC member.

Adding to the PoR FUD this week was news of Binance’s auditor halting all work with crypto clients. Mazars is a global auditing firm that published PoRs for several crypto firms, including Binance, Kucoin and Crypto.com.

They originally published a PoR report on Binance stating that the exchange had a 101% collateralization ratio (at the time). Since their announcement of halting services for crypto clients, Mazars has taken down the report, causing a wildfire of FUD.

It definitely seems sketchy at first, but this is what Mazars had to say about it: "[Mazars] paused its activity relating to the provision of Proof of Reserves Reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public."

To be fair, Mazar halted work with all crypto clients, not just Binance. Given the current climate and criticism, they may have felt that it was too risky to provide crypto audits.

Despite the PoR FUD, plus the money laundering accusations and insolvency speculation, Binance has continued to prove that they are able to withstand the whiplash.

Like that one annoying kid in class, Binance is that smart-ass who always passes with flying colors while their peers give it the side-eye. But still, you need to be careful. You never know what kinds of cheating tactics the gold-star student could be using to get ahead.

2/ Is Binance buying Voyager good or bad?

While we’re on the topic of Binance FUD, let’s talk about the latest news about their buyout of Voyager assets for $1 billion.

To quickly recap, Voyager is a crypto lending and borrowing firm that filed for bankruptcy earlier this year after falling victim to the Terra/LUNA and 3AC collapse.

At the time, FTX founder Sam Bankman-fried (SBF) was looking to bail out Voyager by offering a line of credit and bidding for their assets. Obviously, since then, we learned that FTX didn’t actually have the capital to buy out Voyager and SBF is now locked away in the Bahamian prison for committing financial fraud.

But guess who is now following in SBF’s footsteps? None other than good guy Binance, of course.

According to the CEO of Binace US, “Voyager users will finally be able to access their digital assets on the Binance.US platform.”

There are still questions about the percentage that Voyager customers will get back, but either way, this is good news to finally put an end to this chapter. It would also help prove that Binance is in fact healthy and solvent.

But we can’t shake the feeling of deja vu…For now, we’re holding our breaths on this news.

3/ How did Trump’s NFT collection perform?

Finally, some other fun crypto news to talk about that’s not about FTX or Binance. Last week, former president Trump teased the coming of a major announcement which turned out to be about the drop of his own NFT collection.

The Trump Digital Trading Cards collection launched with a total of 45,000 NFTs on Polygon, each selling for $99. You might be laughing, but the collection sold out in less than a day, netting over $4 million in revenue. Secondary sales also climbed the charts. At its peak, the floor price reached 0.84 ETH.

So is there any utility to these NFTs, or is this just another thing to add to your meme collection? The answer is both. The NFTs enter buyers into raffles for a number of prizes, including a dinner with Trump, a Zoom call with Trump, a visit to his private island, and much more.

Some think that this is good news for crypto adoption, like CZ of Binance.

To others, this is the bottom of crypto winter. Let’s not forget that Trump was once anti-crypto. Wonder what changed his tune?

In other news 🗞

• Yuga Labs, creator of BAYC announces their new CEO. Daniel Alegre helped develop major gaming brands like Call of Duty, World of Warcraft, Diablo, Overwatch, and Candy Crush.

• After a few days of Bahamian prison time, SBF changes his mind about extradition to the US. Guess he didn't like it there.

• Solana DeFi exchange, Raydium is hacked out of $2 million. The hacker apparently gained access to the protocol owner’s private keys.