Binance Too Big for Its Boots Say Blockchain Analysts Weiss

Blockchain analysts over at Weiss Ratings poured some cold water on the Binance hype that’s been getting pumped out recently.

As well as suggesting that regulatory pressure would soon bear down on Binance if it didn’t change some of its current practices, the Weiss folks dismissed the concept of its new Venus stablecoin.

Ledger Problems

Back in late July the Weiss people gave Binance a back-handed compliment when they said the reason for Binance’s success was its centralization.

“Because #BNB is centralized, its creators are constantly creating new use cases for it, which increases its market cap and keeps the asset going. BNB is successful BECAUSE it’s centralized. Interesting.”

On the same day, the Weiss team sent out a tweet reminding everyone that it’s (almost) impossible to shut down a decentralized operation. So by implication…Binance can be shut down?

That a possibility, despite the fact that Changpeng Zhao (CZ) and the team are set up in Malta, outwith the regulatory arm of the SEC. That said, in recent months Binance has begun to expand its operations, with an eye on ‘going legit’ in Western markets, particularly the U.S.

On August 16th, the Weiss team were on the subject of Binance again, this time suggesting the centralization of the Binance exchange was a regulatory weak point:

“The only way that #BinanceChain can overcome its regulatory risks is to allow it to transfer coins between itself and other ledgers, such as BTC or ETH directly without going through the centralized Binance exchange.”

“No Chance” on Binance Venus Stablecoin

Binance recently announced plans for a localized stablecoin project called Venus. The concept involves backing the stablecoin with currencies from various countries around the world. That would involve snagging the cooperation of various authorities in multiple jurisdictions. According to the Weiss team, the chances of this happening are slim – and it’s the exchange’s own fault.

“Binance is launching Venus, a project that will develop “localized” stablecoins around the world. Its goal is to ultimately replace fiat currencies globally. Not going to happen. Fiat requires trust, and Binance is lacking in that department, especially after the recent hacks.”

Hacks are one thing. But what must be more damning for Binance at this stage is the constant inflation of trade volume that occurs on its platform.

A bank can be hacked, as can an exchange. This might suggest some negligence on the part of the bank, or ill-preparedness. But it doesn’t suggest dishonesty or criminality.

But if that bank arbitrarily pumped the numbers of its favoured clients, and cooked its own books to give off the illusion of success, then we’re talking about something else entirely.

CEO CZ remains bullish on the crypto market, despite the downward momentum of recent weeks.

CEOs of crypto exchanges have good reason to maintain bullishnes in public; take his optimism with a pinch of salt.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Author:
Greg Thomson is a freelance writer who contributes to leading cryptocurrency and blockchain publications like CCN, Hacked, and others.