What is Going on with Binance and their Questionable Token Burn?

Binance, the world’s biggest exchange has burned 2,061,888 $BNB (36,798,103 USD). This means Binance burned their second highest amount since they began their quarterly burns. 

Binance have said they will do a quarterly and regularly burn until 50% of their team tokens are destroyed.Token Burns are commonplace in the industry, but Binance’s latest destroying of tokens has proven quite controversial due to its size.

The basis for how Binance works out how many tokens it burns comes from the amount of profits taken and the trading volume. The size and lack of correlation between the size of the burn and the amount of trading volume/profits. 

Trading Volume low, Burning amount high?

Binance, whose white paper states that,“every quarter, we will destroy BNB based on the trading volume on our crypto to crypto platform”. This makes the Q3 burn quite strange. As the figure below shows, the Q3 trading volume was much lower than that of Q2.  But, this burn is vastly higher than that of the Q2. Binance are going against their white paper.

“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 Block’s Larry Cermak pointed out. 

Perhaps Binance’s profits are the reason for the wide scale burn. “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, “ stated Cermak. How can Binance have made such big profits when trading volume was low? Maybe it is due to their recent additions, but all the same it does look a little strange. 

Binance forgetting the white paper again

The other white paper incident comes with regards to their outline of the burns and the amount Binance claimed their team owned.. The white paper says they will remove 100 million BNB from the 200 million BNB they already have. 

Yet, the simple addition of burned addresses (48,461,324) and current supply (185,474,825), gives a total that comes out at 233,936,149 total. That’s 33 million more. Binance aren’t following their white paper, as this whole Q3 burn has shown. 

2019 has seen a lot of issues and controversies for Binance. 7,000 Bitcoins worth about $40 million were stolen in May and the KYC hack in August, which saw its customer’s personal details being leaked online.

Now questionable token burns are the new issue for Binance, let see how they will answer these worrisome issues again. 

Elina is New York based writer and media consultant. Currently she is involved as an advisor in several ICOs. In addition to her professional interests, she loves jazz, modern art, coffee, and yoga.

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