Following a turbulent year which has seen crypto exchange Binance having its hot wallet hacked for around 7,000 Bitcoin, and its customers’ private data leaked online, the Malta-based exchange is facing further questions about its latest token burn.
Having already faced criticism in June for its previous burn of its platform coin, Binance Coin (BNB), it looks like the exchange is in hot water again, with its latest burn raising more questions about the exchange’s practices.
This time questions are being asked on social media about the recent burn, Binance’s ninth, which burnt just over two million BNB tokens, equivalent to around $36.7 million.
In the last burn in June, around 800,000 BNB tokens were burnt, which was worth around $23.8 million at the time.
Numbers don’t add up
In its white paper Binance has previously said 200 million BNB tokens will be created, of which 100 million will be burnt in total, but with Binance announcing that 14,525,135 tokens have so far been burnt, that would leave a remainder of 185,474,865.
But in its announcement, Binance says a slightly lower figure of 185,474,825 BNB are “remaining”, a number also at odds with the number of BNB remaining according to the burn transaction address, which is provided in the announcement, and which indicates there is a total of 48,461,323 BNB remaining, NOT 185,474,825, or even 185,474,865.
On top of this oddity in accounting, which doesn’t quite seem to add up, questions are being asked why the recent token burn has accounted for such a high volume given that the exchange had a lower trading volume in quarter 3, than quarter 2, as this chart shows.
In June, Binance sparked controversy after the exchange changed the method it used to burn tokens. Prior to June Binance bought back 20 per cent of the exchange’s revenue, which it then burnt to raise the scarcity of the asset, in the hope it would increase demand for it.
But in June the platform burnt the portion of BNB that has been deliberately locked up for the Binance team, leading to concerns it would devalue the currency in the long term, and at the time coinciding with a seven per cent drop in the price of BNB tokens, according to CoinMarketCap.