Nansen Analyst: On-Chain Data Shows Binance Is A Financial ‘Black Box’

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Binance, the top cryptocurrency exchange with trading volumeis «very well capitalized,» but its finances are still «very much in a black box,» said an analyst at data insights company Nansen.

Andrew Thurman told Topcripto’s «First Mover» that while the exchange has published that it has $55 billion in customer deposits on the chain, «other than that, we don’t have a lot of on-chain financial access or transparency or any kind of chain. their entities.”

Binance came under the media microscope after a large sum of funds, equal to about $6 billion, moved off the exchange last week during a 24-hour period. Jump Trading, a prominent trading firm in the ecosystem, was among the largest entities that moved funds out of Binance, according to Nansen’s analysis.

Read more: Binance.US Agrees to Buy Voyager Assets for $1.02B

Thurman said it could be a way for Jump Trade to redeem his BUSDwhich is issued by Paxosexchange licensed by the New York State Department of Financial Services.

Still, Thurman said that despite Binance being one of the first exchanges to issue proof of reserves, through a report since released by its auditor Mazars, in addition to being well capitalized after the collapse of FTX it is difficult to identify . the financial health of the exchange. «In short, you can’t» tell whether users can see the exchange’s liabilities against its supposed assets of $55 billion, Thurman said.

“Proof of reserves doesn’t give you the whole picture. It’s not a full audit,” Thurman said.

It remains unclear whether BNB, Binance’s native token, could face the same fate as FTT, the native token of the bankrupt FTX exchange, Thurman said. “You would have to see about $12 billion in net outflows for [Binance] to emphasize the same way FTX was before they stopped withdrawals,” said Thurman.

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BNB is clearly «a very popular chain,» Thurman said, and «there’s real activity.» However, «We have no idea what the liabilities are on Binance’s side or how BNB plays into that,» Thurman said. He said what is known is that Paxos has at least $18 billion of the $55 billion in buffered reserves.

«We know there’s at least $18 billion in real dollars, even if you discount the value of all the different digital assets that Binance has,» Thurman said.

Thurman is less concerned about reports of flows between Binance and its American subsidiary.

“In my personal opinion, some of these transfers are between Binance and Binance.US, the noise around them could be a little overblown,” Thurman said. «Transfers between exchanges are not uncommon, especially when it’s a market maker moving large amounts of stablecoins.»

Topcripto reached out for comment from Binance but did not hear back by publication time.

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