Palestine controversy sparks Binance bitcoin outflow speculation
Fears circulated on Wednesday of a liquidity crisis at Binance. After people claimed that customers withdrew 44,808 bitcoins — screenshotting yet failing to cite CoinGlass data in almost all of their posts — the mysterious number spread like a conspiratorial wildfire.
On August 28, 44,808 bitcoin left the exchange, according to a 24-hour snapshot on CoinGlass. (Notably, CoinGlass competitor Arkham does not show this net change in Binance bitcoin holdings, suggesting that the withdrawals were quickly serviced with replenishments from cold storage in the same 24-hour period.)
Indeed, on August 27 — just hours before those withdrawals commenced — Binance moved 30,000 bitcoin from its cold storage wallet to an omnibus hot wallet so that it could service those August 28 withdrawals in an orderly fashion. The fearmongers omitted that detail.
Aiming to broadcast the scariest number possible, they also omitted Binance’s total assets which contain at least $70 billion of non-bitcoin assets according to data from Arkham. Instead, their fear focused only on its bitcoin holdings.
Certainly, something terrible must have caused the alleged withdrawal of 44,808 bitcoins.
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Omitting context and cherry-picking data
To that end and to maximize the impact of the supposed news, those posting the news omitted any contextualization of the $2.6 billion withdrawal relative to Binance’s total (bitcoin and altcoin) holdings exceeding $110 billion according to Arkham. Adding that proportion would have revealed a far less newsworthy -2.3% change.
Nor did they mention that Arkham’s bitcoin balance history for Binance — as well as Binance’s own attestation — conflicts with CoinGlass data. Indeed, as of press time, CoinGlass claims that Binance only possesses 565,763 bitcoins while Binance itself attests that it possesses 652,370.
To make believing these conspiracy theories even more difficult, posters simultaneously tried to frame Binance in another negative media story on Wednesday. In addition to supposed fears about its ability to service bitcoin withdrawals (despite Binance’s orderly replenishment of 30,000 bitcoin mere hours prior), critics claimed the exchange — or perhaps, a covert Israeli operation — was closing accounts or even seizing assets from Palestinian users.
The most outrageous commenters on this topic claimed Binance somehow supported genocide.
Altogether, they tried to make a hashtag trend, #BoycottBinance, as though it indicated solidarity with Palestine.
Binance CEO Richard Teng hit back at the Palestine allegations, branding them ‘FUD.’ In a post to X, Teng said, “Only a limited number of user accounts, linked to illicit funds, were blocked from transacting.”
He added, “As a global crypto exchange, we comply with internationally accepted anti-money laundering legislation, just like any other financial institution.”
Correlation does not equal causation
These influencers also tried to connect the two events as a causative sequence — claiming that Binance’s alleged seizure of Palestinian assets caused users to #BoycottBinance and withdraw 44,808 bitcoin.
They alleged that withdrawals proved that their campaign was working.
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Needless to say, the post hoc fallacy reminds us that this conclusion is logically dubious.
Moreover, their screenshotted and unattributed data from a conflicted data provider that disagrees with not only Arkham but also Binance’s own attestation of its bitcoin holdings makes believing the spin quite difficult.
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