Bitcoin SV [BSV], the BCH hardfork, and Binance, the largest cryptocurrency exchange in the world, have been at loggerheads since the exchange delisted Satoshi’s Vision last week. It looks like their dispute isn’t over yet, with Coingeek, the BSV mouthpiece, reporting that Binance plays a part in “criminal operations,” citing several sources.
Calvin Ayre, one of the spearheads of Satoshi’s Vision project and his acquired crypto-media house, Coingeek, recently released an article titled, “Binance ‘most likely involved in criminal operations’: report,” detailing the exchange’s misgivings in terms of exchange volumes, in light of recent reports that indicate the same.
The main source credited by Coingeek was a recent video by Chico Crypto, spelling out fake volume and wash trades based on the groundbreaking Bitwise Asset Management report. According to the report, only ten exchanges reported “real volume,” with Binance being one of them.
However, among the ten exchanges, Binance was the only exchange that was neither registered as a Money Services Business [MSB] under the Financial Crimes Enforcement Network [FinCEN], nor had a BitLicense, the regulatory license required to operate in the state of New York.
The Bitwise report also highlighted [which Coingeek did not shed light on] the lack of market surveillance tools employed by Binance. It should be noted that such tools were not incorporated on bitFlyer, Bittrex, itBit and Kraken either. The report stated that this tool can “help detect market manipulations such as spoofing and wash trading through the real-time and historical analysis of trades, order books, and other market information.”
Coingeek backed Tyler Swope, the host of Chico Crypto’s, who posed the critical question to the exchange,
“If Binance has nothing to hide and their volume is real and they’re not doing anything illegal, why wouldn’t they get both of those?”
Binance has had a prominent history of jumping through hoops to avoid regulation. Moving from China to Japan and now, to Malta in search of their regulatory paradise. Also, the exchange is pushing the boundaries to avoid working with banking institutions, even chiding fiat support. The exchange instead, opts for Tether [USDT] as a base pair, despite the top stablecoin reportedly not being backed one-for-one by US Dollar reserves.
Another key issue highlighted by Binance’s critics was the lack of KYC and money laundering policies implemented by the exchange. In light of this, the exchange partnered with IdentityMind, a risk management firm to shore up its security policies. This indicated self-regulation over imposed regulation, to the larger cryptocurrency community.
The other report cited by Coingeek was the “Market Surveillance Report” for April 2019 by Blockchain Transparency Institute [BTI]. The report suggested that Binance and Bitfinex had “over 10% wash trading.” However, BTI added,
“Binance’s top volume pairs are also largely clean as we suspected, however, market makers and bots are taking advantage of around 30 pairs on the exchange. We have found Binance to be about 85-90% clean depending on the day.”
The top crypto-exchange was “unverified” by BTI, at the time of writing the report and hence, presented no “major red flags.”
Interestingly, what Coingeek failed to mention was BTI’s December 2018 “Exchange Volumes Report” that identified only two exchanges that were not “grossly wash trading their volumes,” Binance and Bitfinex. The two exchanges had 100 percent real volume, while exchanges like HitBTC and Huobi had under 27 percent.
BTI’s Exchange Volumes Report stated,
“Most of these pairs’ actual volume is under 1% of their reported volume on CMC. We noted only 2 out of the top 25 pairs not to be grossly wash trading their volume, Binance and Bitfinex.”
Additionally, a report from The Tie analyzed cryptocurrency exchanges’ expected volume with their reported volume and suggested that Binance’s volume was 78.82 percent, placing it in the category of “Low Potentially Fake Volume.” OKEx, which recently partnered with RelayX’s Jack Liu to launch FloatSV ,a “Bitcoin SV based exchange,” accounted for 5.94 percent of “Expected to Reported Volume,” suggesting “High Potentially Fake Volume.”
Despite the above, Coingeek reiterated Swope’s concluding comments, stating,
“Binance has many things to hide and will never get regulatory approval because they are most likely involved in criminal operations.”
Further, going by Calvin Ayre’s comments, Bitcoin Cash [BCH] advocate and Bitcoin.com CEO Roger Ver is also a part of this Binance “scam.” Ayre stated the same, citing “industry rumor.” His tweet read,
This line of reporting from the Calvin Ayre-backed media house comes as no surprise, given the feud between the BSV camp and Binance over the past few weeks. Binance triggered a delisting landslide for BSV, following Ayre’s legal charge against those who disputed Craig S Wright’s “claim” of being the real Satoshi Nakamoto.
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