Binance temporarily suspends USDC withdrawals • Hacker News Board

Re: Binance temporarily suspends USDC withdrawals

#181

Post by crypt1d » Tue, Dec 13, 2022, 4:27 PM UTC

gizzlon wrote: post #166

crypt1d wrote: post #157

Earlier quoted context omitted.

Not sure I follow. Why would they mint BUSD if people are withdrawing other coins? BUSD is just USD denominated in tokens on chain, each token represents 1 usd at their bank so they cannot (or rather, should not) mint more than they have in custody.

Yeah, but what happens if it's not worth 1 $ anymore? My understanding is limited, but naively: - I give them 10 USDC - They convert it to 10 BUSD - Price of BUSD falls to 0.5$ - I want my 10 USDC back - They have to sell 20 BUSD to get 10 USDC - They have to generate 10 BUSD ?? I'm sure this is not how it actually works, but you get my point. Also, one could argue that if the BUSD price drops against the dollar they…

Fair question.

Although, in practice, I don't think they would buy USDC via BUSD, but use their cash reserves for that. The cash reserves correspond (allegedly) 1:1 to BUSD so they would need to burn equivalent amount of BUSD as well. This all means that Binance would always value BUSD at 1 USD. I don't see a scenario where BUSD falls to 0.5usd if there are no shenanigans happening with the cash reserves.

Re: Binance temporarily suspends USDC withdrawals

#182

Post by nailer » Tue, Dec 13, 2022, 4:27 PM UTC

crypt1d wrote: post #179

nailer wrote: post #178

Earlier quoted context omitted.

> They are not a custody service, they are an exchange. Interesting. Because a lot of people think they're a custody service and use Binance as such. > They are not obliged to hold USDC, if all customers have their assets in BUSD due to the conversions that happened. What? Someone trusted Binance to store USDC. The conversions should not have happened. > Are you expecting Binance to have 1:1 BUSD on hand, in addition…

> Interesting. Because a lot of people think they're an exchange and use BInance as such. ...that's what I said? > What? Someone trusted Binance to store USDC. The conversions should not have happened. Conversions were announced timely. See https://www.binance.com/en/support/faq/what-is-busd-auto-con... > No. Nobody is expecting that. You're the only person that mentioned it. Its the logical conclusion of people expe…

Sorry I typed too quickly. People can and do expect Binance to be /custodians/.

> Conversions were announced timely.

Yes. Without consent of customers, or even any confirmation from customers that they'd read of and were aware of their coins being swapped for a different currency backed by a different organisation.

> Its the logical conclusion of people expecting Binance to hold full USDC deposit amounts

No. The logical conclusion of people expecting Binance to hold full USDC deposit amounts is a 1:1 USDC holding, not to have a second BUSD copy of every coin. This is a bizarre straw man.

Re: Binance temporarily suspends USDC withdrawals

#183

Post by nailer » Tue, Dec 13, 2022, 5:26 PM UTC

vgatherps wrote: post #22

joyfylbanana wrote: post #16

Earlier quoted context omitted.

Probably not dollars, but some kind of low-risk assets like USD bonds? In that case you also can't just withdraw dollars, you have to sell the bonds - if they have to convert large amount like hundreds of millions, the spread on those bonds might get larger. Also even though it were just dollars in a regular bank account, when the amounts go large enough, the bank might have liquidity issues of their own. What would…

IIRC BUSD is whitelabeled from Paxos so it would probably be fine in the case of Binance troubles. 100MM isn't nothing, but it's very much moveable. Bond markets trade absolutely massive size. Even hen you could tell people "hey, you can't get your USDC, but we're trading out of positions over the next two weeks". Sucks but drastically different than an FTX situation.

It's kinda both a Paxos product and not:

https://paxos.com/busd/

> It is important to understand the distinction between BUSD and Binance-Peg BUSD. These are two different products. Binance USD (BUSD) is a regulated, fiat-backed stablecoin pegged to the US dollar. The Paxos-issued BUSD stablecoin, as well as its reserves, are subject to strict regulatory oversight by the New York Department of Financial Services. BUSD is backed by reserves held in either or both (i) fiat cash in dedicated omnibus accounts at insured U.S. banks and/or (ii) U.S. Treasury bills (including through repurchase agreements and/or money-market funds invested in U.S. Treasury bills).

> Binance-Peg BUSD, which is not issued by Paxos and is not regulated by NYDFS, is a separate product. Binance independently mints Binance-Peg BUSD on other blockchains (e.g., BNB Chain, Polygon and Avalanche) and pegs the tokens to BUSD on a one-to-one basis. This allows holders of both tokens to swap tokens between Ethereum and other blockchains.

Re: Binance temporarily suspends USDC withdrawals

#184

Post by denton-scratch » Tue, Dec 13, 2022, 5:51 PM UTC

nailer wrote: post #180

denton-scratch wrote: post #162

Earlier quoted context omitted.

...signed by the Governor of the Bank Of England, the oldest central bank in the world, which has never yet reneged on that promise to exchange paper for hard currency.

I see your point, but also: that pound was a failed stablecoin against the Deutschemark at one time. http://news.bbc.co.uk/onthisday/hi/dates/stories/september/1...

> a failed stablecoin against the Deutschemark

That's an interesting way of spinning the pound falling out of the ERM (which wasn't the same as the Deutschmark). From the perspective here, getting out of the ERM was a blessing, not a "failure".

And at no point did a paper pound cease to be exchangeable with hard currency. So I stand by my earlier remark.

Re: Binance temporarily suspends USDC withdrawals

#185

Post by crypt1d » Tue, Dec 13, 2022, 6:26 PM UTC

nailer wrote: post #182

crypt1d wrote: post #179

Earlier quoted context omitted.

> Interesting. Because a lot of people think they're an exchange and use BInance as such. ...that's what I said? > What? Someone trusted Binance to store USDC. The conversions should not have happened. Conversions were announced timely. See https://www.binance.com/en/support/faq/what-is-busd-auto-con... > No. Nobody is expecting that. You're the only person that mentioned it. Its the logical conclusion of people expe…

Sorry I typed too quickly. People can and do expect Binance to be /custodians/. > Conversions were announced timely. Yes. Without consent of customers, or even any confirmation from customers that they'd read of and were aware of their coins being swapped for a different currency backed by a different organisation. > Its the logical conclusion of people expecting Binance to hold full USDC deposit amounts No. The logi…

I guess we'll have to agree to disagree then. If customers didn't want their USDC deposits converted, they shouldn't have used Binance. Its not a public service company. Same goes for your expectations of custody, they never claimed to be one.

Conversions are even announced when you go to deposit USDC:

"Please note that your USDC Deposit will be auto-converted to BUSD at a 1:1 Ratio. Please refer to announcement details. https://www.binance.com/en/support/announcement/e62f703604a9..."

I don't see how your point holds, besides "customer expected X, but got Y" - but this is because customer is misinformed, not because Binance has an obligation to store USDC 1:1 (in this case).

Re: Binance temporarily suspends USDC withdrawals

#186

Post by nailer » Tue, Dec 13, 2022, 7:44 PM UTC

crypt1d wrote: post #185

nailer wrote: post #182

Earlier quoted context omitted.

Sorry I typed too quickly. People can and do expect Binance to be /custodians/. > Conversions were announced timely. Yes. Without consent of customers, or even any confirmation from customers that they'd read of and were aware of their coins being swapped for a different currency backed by a different organisation. > Its the logical conclusion of people expecting Binance to hold full USDC deposit amounts No. The logi…

I guess we'll have to agree to disagree then. If customers didn't want their USDC deposits converted, they shouldn't have used Binance. Its not a public service company. Same goes for your expectations of custody, they never claimed to be one. Conversions are even announced when you go to deposit USDC: "Please note that your USDC Deposit will be auto-converted to BUSD at a 1:1 Ratio. Please refer to announcement deta…

Nobody said Binance was a public service company. This is another bizarre straw man.

> never claimed to be one.

Binance say they are a custodian on their own website.

> customer expected X, but got Y

Yes. Misleading people for financial gain is fraud.

> this is because customer is misinformed

No customer holding USDC in Binance knew their funds would be replaced before Binance replaced their funds.

Re: Binance temporarily suspends USDC withdrawals

#187

Post by nailer » Tue, Dec 13, 2022, 8:57 PM UTC

madsbuch wrote: post #132

nailer wrote: post #100

Earlier quoted context omitted.

Binance replacing USDC with BUSD is not having USDC reserves. If Binance had USDC reserves they would not need to burn BUSD, mint USDC or require banks to be open. Because Binance already would hold the USDC. Likewise if something happened to the value of BUSD, it should be fine, because you hold USDC. Except you don't because Binance replaced the coins they were supposedly holding in custody for you.

1. It was said that Binance treats BUSD and USDC as the same currency 2. It was said that there is a high number of USDC withdrawals If Binance had USDC reserves they would not need to burn BUSD Well, if they didn't provide the service of treating the currencies as the same, they would have been able to fully cover. However, they do, so it is expected that they need to convert. All in all, it seems perfectly natural…

> It was said that Binance treats BUSD and USDC as the same currency

Yes, that is a mistake, trust in Circle is not the same as trust in binance

> service of treating the currencies as the same

Replacing customer’s investments is not a service, particularly if it makes it more difficult to withdraw the currency.

Re: Binance temporarily suspends USDC withdrawals

#188

Post by LudwigNagasena » Tue, Dec 13, 2022, 9:26 PM UTC

denton-scratch wrote: post #162

LudwigNagasena wrote: post #114

Earlier quoted context omitted.

As if government institutions are any more dutiful. The British banknotes still say “I promise to pay the bearer on demand…” as a big FU to all the holders.

...signed by the Governor of the Bank Of England, the oldest central bank in the world, which has never yet reneged on that promise to exchange paper for hard currency.

Not sure if that’s sarcasm, but the promise is to exchange it for gold, not “hard currency”. Barely 100 years since the establishment of the Bank of England has passed before the convertibility was annulled for 20 years because of wars and, as a consequence, gold shortage.

Re: Binance temporarily suspends USDC withdrawals

#189

Post by unnouinceput » Tue, Dec 13, 2022, 10:08 PM UTC

jacquesm wrote: post #137

unnouinceput wrote: post #123

Earlier quoted context omitted.

Well, housing Nazis tends to put you on, at the very least, a "tread with caution" international list, not to mention on the very infamous Mossad's "blacklist". Argentina and Switzerland are their black sheep for housing Nazis and stealing the Jewish gold.

That happened 70 years and many governments ago and has absolutely no bearing on international dealings with either Switzerland or Argentina today any more than that dealings with Germany do and has nothing at all to do with Binance.

Don't forget to tell that to Mossad who not even a few years ago hunted down a 90 years old Hungarian dude who was nothing more than a simple guard at one of the concentration camps, forget which one.

Re: Binance temporarily suspends USDC withdrawals

#190

Post by jacquesm » Tue, Dec 13, 2022, 11:37 PM UTC

unnouinceput wrote: post #189

jacquesm wrote: post #137

Earlier quoted context omitted.

That happened 70 years and many governments ago and has absolutely no bearing on international dealings with either Switzerland or Argentina today any more than that dealings with Germany do and has nothing at all to do with Binance.

Don't forget to tell that to Mossad who not even a few years ago hunted down a 90 years old Hungarian dude who was nothing more than a simple guard at one of the concentration camps, forget which one.

The Mossad's relentless focus and unlimited budget to go after these assholes is commendable. But that is a very long way from seeing the present day Argentina as directly influenced by the Nazis.

Laszlo Csatary is probably who you are thinking of. We're rapidly approaching the end of the hunt though, simply because there are fewer and fewer of the escapees still alive.