Key Takeaways
Why is Binance still under the heat despite generous repayments?
Critics remain suspicious about the exchange’s massive compensation.
What’s the impact of the FUD?
Billions of dollars of assets have been withdrawn from exchanges amid low trust.
It’s been a tough week for Binance [BNB], the world’s largest crypto exchange, following reports that issues with its trading systems escalated the 10th of October flash crash.
Despite pouring millions into compensation, the exchange continued to face mounting community scrutiny.
The firm has pledged over $700 million in repayments; $45 million for memecoin traders, $283 million to cover losses linked to de-pegging issues, and $400 million for Futures and institutional traders to restart their trading.
While Binance denied responsibility for the crash, its massive repayment sparked debate. One critic, Benson Sun of Coin Karma, questioned,
“Why spend hundreds of millions to cover something that supposedly isn’t your responsibility?”
Source: X
CZ: ‘We protect users’
To clear the FUD, Binance Founder, Changpeng Zhao, CZ, slammed the critics, clarifying that it wasn’t the first time the exchange had supported its users.
He noted that the first compensation they made during the China crypto ban in 2017, worth $6 million or about 40% of its operational funds at that time. CZ added that they repaid users, but the projects that crashed weren’t theirs.
But it helped them build trust and become the world’s largest crypto exchange. He noted,
“The market rewarded us. Users from around the world joined us. They saw that Binance protected users with not just words, but with action and funds. Hence, our core value: protect users!”
Source: X
Alleged flawed listing practices on Binance
But other ecosystem builders also alleged that Binance has been charging as high as $2 million BNB security deposit and other fees to be listed on the platform.
Several founders and builders supported these claims, including crypto VCs like Moonrock Capital’s Simon Dedic and Mike Dudas of 6th Man Ventures. Dudas highlighted,
“Binance wants to take a nearly 10% tax from every innovator in the crypto space who launches a token. This is a 10x worse experience than tradfi; enough is enough.”
But the exchange denied the listing allegations and called the claims “false and defamatory.”
Unsurprisingly, cautious investors opted to withdraw funds from centralized exchanges amid all the drama.
Outflows reveal investor unease
In fact, Binance recorded the largest outflow of $21.75 billion in the past seven days. The overall market sentiment was still at a “fear” level of 34, underscoring broader caution.
Source: CoinGlass
