What if I told you there were more than 21 million Bitcoin?
The coded hardcap of the assets total supply…Many of you wouldn’t take me seriously…but
what happened with FTX is giving us a front row glimpse into how centralized exchanges
can inflate the BTC supply.
What can be done about this?
Well find out in about ten minutes…because it’s time for Chico Crypto!!
What makes BTC special is its limited supply.
Unlike other assets Bitcoin is provably scarce, and total supply ever created is 21 million
BTC.
But centralized entities can inflate the supply…trading on fractional reserves….
Yup FTX spilled the beans on centralized exchanges shady operational practices.
Just a couple days ago FTX’s balance sheet was leaked and they held only $1 billion in
liquid assets, with over $9 billion in customer liabilities.
Jumping to the leaked Balance sheet we can see they had over 1.4 billion in Bitcoin Liabilities
aka customer deposits or open trades on the platform, yet they didn’t hold a single
one…there wasn’t a single Bitcoin in the asset section.
This means, FTX worked on a fractional reserve model…they were using customer funds to
allow them to make risky bets in the crypto markets & it’s highly likely many customers
who bought Bitcoin or other assets on the exchange, were just buying an IOU, which FTX
didn’t have the reserves for…which means FTX was inflating the Bitcoin supply!!
Although this practice goes all the way back to the early days of BTC.
From 2011 to 2013 the now infamous Mt.
Gox, Bitcoin’s first Big exchange, was operating on fractional reserves which if we check out
the chart, we can see the huge discrepancy between their actual balance, and what they
should have had for their customers.
Shoot even the blood of the crypto markets, Tether, has been proven to be running on fractional
reserves.
In 2021 the CFTC fined Tether operators for this, the CFTC document states “In fact
Tether reserves were not “fully-backed” the majority of the time.
As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT
tether tokens in circulation for only 27.6% of the days in a 26-month sample time period
from 2016 through 2018”
And today we are finding out more BIG name centralized entities are operating in the
same way.
From this SEC document versus BlockFi, we can see under the section BlockFi Misrepresented
the Level of Risk in the BIA Investment Opportunity they say “Beginning at the time of the BIA
launch on March 4, 2019 and continuing to August 31, 2021, BlockFi made a statement
in multiple website posts that its institutional loans were “typically” over-collateralized,
when in fact, most institutional loans were not.
s.
Approximately 24% of institutional crypto asset loans made in 2019 were overcollateralized;
in 2020 approximately 16% were over-collateralized; and in 2021 (through June 30, 2021) approximately
17% were over-collateralized”
It’s no wonder they are now going to be filing for bankruptcy as the FTX Contagion
spreads…
That is why the hero of the crypto industry, CZ Binance, is making a stand against fractional
reserves…he first tweeted this earlier this week “All crypto exchanges should do merkle-tree
proof-of-reserves.
Banks run on fractional reserves.
Crypto exchanges should not.
Binance will start to do proof-of-reserves soon.
Full transparency.”
He then upped the ante tweeting this “#Binance published cold wallet addresses and balances
for 6 of our 600 coins.
More to come.
“ With the balances of certain coins shown below.
Then he went even further, like a crypto knight in shining armor.
News was released that Binance was going to be a guinea pig for Vitalik Buterin’s proof
of reserve protocol!!
He is such a saint and savior….Binance would never do any harm, they wouldn’t run on
fractional reserves like the majority of crypto exchanges….P
Psssshhht YEAH right…….CZ is scum in my opinion and may have leaked that Binance has
been and currently is running on fractional reserves!!
First we need to analyze this tweet from CZ on November 8th, the first day of the FTX
debacle.
CZ tweeted “Two big lessons: Number One: Never use a token you created as collateral.
And Number 2: Don’t borrow if you run a crypto business.
Don't use capital "efficiently".
Have a large reserve.”
He said a lesson from what’s going on with FTX…have a large reserve.
He didn’t say have a fully backed 1:1 reserve, but a large reserve….
Was this an admission that some of Binance’s trading pairs are running on fractional reserves??
Well Binance may have spilt the beans that this is exactly the case!!
Binance has a proof of assets page where they show cold wallet balances of crypto assets
with the Binance exchange…
Using the Wayback machine, which I’ll explain why we are using this in a second, and going
to November 10th, we can see if we scroll down to Bitcoin Cash, that Binance said they
have a balance of over 451 thousand Bitcoin Cash…
This includes the cold wallet which holds the assets…but we can click the arrow to
directly take us to that cold wallet on the bitcoin cash block explorer.
Clicking the arrow takes us to the wallet and take a look at the balance of Bitcoin
Cash…only over 112 thousand?
Now if you take a look at the website today…they have changed the name from proof of assets,
to proof of collateral for b-tokens, and if we look at Bitcoin Cash, they now have put
the “correct balance” listed, just over 112 thousand.
So you have to ask yourself…where did the balance of over 451 thousand come from that
was on your website November 10th??
Well Binance may have accidentally posted their Bitcoin Cash liabilities instead of
their Bitcoin Cash reserves!!
Binance first said they had a reserve balance of 451 thousand,920 bitcoin cash.
When that number didn’t match their cold storage amount they changed it to match it…again
where did that over 451 thousand BCH come from??
It was a number the employee who entered it got from somewhere.
I’m guessing instead of entering the “reserve” the employee entered the liability.
Running on fractional reserves when touting that the exchange doesn’t participate in
the practice & have full reserves.
Why you so Bad Binance!??
Well it doesn’t surprise me when the exchange is being investigated for possible insider
trading.
Late last year Bloomberg reported just this saying “U.S. investigations into Binance
Holdings Ltd. have expanded, with authorities now examining possible insider trading and
market manipulation.
The review involves Commodity Futures Trading Commission investigators, who in recent weeks
have been reaching out to potential witnesses.
The CFTC, which routinely shares its findings with other federal agencies, has sought internal
Binance data and communications.
Among topics the CFTC has recently asked potential witnesses about is the location of Binance’s
data servers,”
Of which CZ Binance, admittedly denied saying “Saw an article about insider trading.
We have a zero-tolerance policy and hold ourselves to the highest standards.
3 investigators reviewed the wallets, none is associated with Binance employees.”
I wonder if there are any instances of Binance being caught insider trading??
Well there is some pretty damning evidence out there…we just need to go back in time…to
the end of 2017 and the first year of the Binance exchange.
This was an action packed time as q4 2017 was the tail end of that cycle's bullrun & Binance
which was newly released was gaining traction and popularity like no-other…
As a new exchange in a highly unregulated market, do you think Binance and insiders
could help themselves from trading against their customers based on unknown information??
No they couldn’t…
In September of 2017, there were leaked messages from a certain someone….the co-founder of
Binance, Yi-He about a certain crypto project, Waltonchain
These messages were leaked to insiders..specifically this message was sent to a strategically important
person to the vechain ecosystem, Jackson Fu…As we can see it’s a screengrab of a conversation
with Yi He from Wechat… now lets see what Jackson said about the message “Just before
I sold everything, it’s legit, 100 percent”...the person talking to Jackson then says ‘who’s
the girl?”
Regarding the screen grab…of which Jackson replies Yi He…when asked about what the
message says, Jackson replies “de-listing wtc” aka waltcoin coin.
This was insider information about the delisting of a coin on the Binance exchange…
Now why is this important?
Well if you didn’t know…in early September China announced that they were banning ICOs
& Walton was a Chinese ICO, who raised their funds within the borders of China
Thus there were rumors circulating that this would be the case and Walton would be delisted
from exchanges like Binance which even prompted the Walton twitter to tweet that this wouldn’t
be the case & putting out a statement to their Chinese ICO supporters.
So did the leaked message from Yi He have an effect on the WTC price?
Well here is Walton’s price on September 14th, 3 days before the message from Yi-He
was leaked on September 17th 2017.
Walton was 2 dollars, rank #75,, with a market cap of nearly 50 million dollars.
Here is Walton just a few days after the YiHe message started circulating, September 22nd.
The price dropped from 2 dollars to 1.26 cents, walton was now rank #98 with a market cap
of just over 31 million dollars…
Now if Binance would conduct themselves like this in the past…who says they aren’t
doing it today?
Don’t trust centralized entities with your funds….they aren’t SAFU with Binance’s
SNAFUS…cheers I’ll see you next time!