In the midst of the FUD storm that is pouring down on the world’s largest cryptocurrency exchange Binance, the action from the market’s leading crypto statistics and aggregation platform CoinGecko seems to fuel the fire, making users nervous.
Note: The article is only intended to convey the quickest information discussed by the Twitter community about Binance, the actual development of CoinGecko and is not intended to FUD the exchange. There hasn’t been any verification by Binance about the incident. Coin68 will constantly update if new data is available.
Over the weekend, Binance faced some “condemnation” from the community over its decision to block a user account for making “absurd” allegations as well as locking withdrawals with accounts that unexpectedly benefited from the volatility of its coin, Sun Token, Ardor, Osmosis, FUN and Golem on the exchange.
Not only that, despite offering a Proof-of-Reserves (PoR) authentication mechanism on the blockchain and being confirmed by the auditor to hold Bitcoin at 101%, Binance is still not qualified to satisfy the “curiosity” code of the media.
Specifically, The Wall Street Journal wrote an article pointing out that Binance’s evidence of asset reserves report did not mention the effectiveness of internal financial controls, so the numbers given are somewhat non-transparent.
Binance’s “proof of reserve” report doesn’t address effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers. I worked at SEC Enforcement for 18+ yrs. This is how I define “red flag. https://t.co/6oEqmArjS9
— John Reed Stark (@JohnReedStark) December 11, 2022
This case also has comments from some famous people in the industry, the incumbent is Jesse Powell – Former CEO of Kraken exchange.
Accordingly, Jesse Powell made a similar point to The Wall Street Journal, saying that the Binance report does not include negative balances (the exchange’s debt). As a result, Binance has not proven their financial situation to the community to be the most accurate, rendering the Proof-of-Reserves (PoR) report worthless. In addition, this report can only prove liability, not property.
AFAIK, Binance includes negative balances, hasn’t proven they’ve published the full tree, nor had an auditor review, making it worthless as proof of anything. Also, it could only prove liabilities, not assets (wallet control). More:https://t.co/c8F6rarhnbhttps://t.co/yQZhMcvlMd
— Jesse Powell (@jespow) December 4, 2022
However, although there has not been any explanation and correction of Binance, CoinGecko has made a very quick move to lower the reputation of the exchange rating on the market. At the time of writing, CoinGecko dropped Binance to 10th place, despite the fact that Binance’s total trading volume is more than the top 9 exchanges combined, with about $3.4 billion.
CoinGecko exchange rankings as of 1:03PM on December 12, 2022. Source: CoinGecko
More notable when considering this decision of CoinGecko is that in mid-November 2022, CoinGecko was caught in the question of still “appreciating” FTX despite knowing there were many vulnerabilities in advance. Therefore, after FTX collapsed, the platform was heavily criticized for not having a solution to warn users by ranking the floor.
At the time, CoinGecko said in the future it would improve this by tracking liquidity, adding a reserve data item where users could see the number of assets the exchanges had on hand, mainly based on data from DeFiLlama and Nansen, as well as many other factors to give the best rating. Zhong Yang Chan, CoinGecko’s head of research, stated at the time:
“Only with the post-FTX scandals has there been a concerted push for centralized exchanges to apply greater transparency to their reserves. However, our plan by the end of 2022 is to update only exchanges that try to demonstrate transparent solvency will be scored highly.”
Overall, investors’ worries are completely understandable because when CoinGecko started applying the new method (11/18/2022), the platform was still ranking Binance as the top 1 market exchange.
CoinGecko exchange ranking for 11/18/2022. Source: CoinGecko
Meanwhile, compared to rival platform CoinMarketCap, Binance is still in the top position.