The customers surely have standing to sue Binance. But to close the gap between what you feel should happen and what could actually happen… exactly what crime could they be prosecuted for?
Next time this happens to Binance though they won't have an emergency fund and possibly they'll be in debt, and that's when the users will be very screwed.
Their terrible security certainly indicates to me that future of Binance is not going to be a pretty one unless they make some enormous changes.
It seems very unlikely they have $3-6B lying around ready to repay customer deposits. At the very least this would be catastrophic for them if they do lose all that money.
Have they re-enabled withdrawals yet? If I were a customer I'd be taking everything out as soon as possible.
For Binance? I’d actually say very likely. They’d need to move a couple of papers around, but should be easy.
withdrawals have been paused since Thursday night. binance says it will reopen them in stages from Sunday and publish proof of reserves by Monday, which is the thing that would actually answer your question.
Funds have been already allocated for recovery by the CEO Richard Teng.
$3.5B stolen was "stable coins", which you could equate to a piece of paper with a dollar amount written on it.
Those are largely freezable by the issuer of the paper.
Then we have $2.4B in Bitcoin and ETH stolen. Those are not directly freezable.
However, if that does create a liquidity challenge for these exchanges, what if the price just so happens to drop by 60% after trading is restricted? That liability might shrink in actual value.
Comparing crypto to actual currency typically connected to large, real economies is not relevant here.
A country like Iceland is far smaller, and their currency famously fluctuated in 2008. Would you consider Icelandic króna as money? Most people do.
Anyway, that and your question are hardly relevant to the fact that Binance and their cabal own the crypto exchanges and consequently could manipulate the price to reduce the size of their obligation denominated in crypto rather than currency or stable coins.
I understand Binance alone accounts for a third of the market, and their ability to coordinate with other exchanges is hardly restricted to the participants we know were in that specific group chat.
I think the point stands that a liability in eg. USD is much different from one denominated in crypto.
Yeah Binance itself is big but it'll take a lot more than one exchange, an exchange everyone is now handling with extra suspicion, to cause a crash.
> I think the point stands that a liability in eg. USD is much different from one denominated in crypto.
If course it's different but that's so much weaker of a point. And the foreign currency comparisons weren't to particularly stable currencies.
Binance obviously has influence on crypto prices, potentially affecting a liability denominated in crypto.
And I'm sure they have nonzero influence but anything significant needs more evidence than a signal call that has Kraken in it.
> "Those are largely freezable by the issuer of the paper."
Interested to understand how this would work in a decentralised accounting mechanism.
Crypto at it's current price has a market cap around $2.6T. Obviously the liquidity is questionable, and since crypto isn't connected to any mention worthy real economic activity, a change in sentiment can quickly crash the price and liquidate leveraged positions.
While that's of course true for other assets also, crypto not being connected to production of real value, combined with the comparative lack of regulation, makes it much easier to manipulate.
In my view their interest, which aligns with that of all other major owners of crypto, is to acquire as much real currency as possible.
Acquiring more crypto by decreasing its valuation is not furthering that.
Maintaining a high valuation and positive sentiment in order to convert buyer's real currency into profit to cash out is what I believe their strategy is.
Presumably the hypothetical price change is reversible or there would be no point. So lower price, buy, raise price, sell, repeat. A dump-n-pump.
So there are good reasons to be skeptical of his statements.
Binance and its former CEO, Changpeng Zhao, were previously sued for willfully evading anti-money laundering (AML) controls. In that instance, the government ruled their compliance failures were not an accident, but a deliberate criminal enterprise. Binance paid $4.3 billion in fines and forfeitures to settle with the DOJ, CFTC, and FinCEN in November 2023.
Note that “crime” has a specific definition in law. You don’t have to be a criminal (commit a crime) to be rightfully sued, civil suits are a thing.
Anyway, your parent comment already answered the question, they would be sued by negligence.
Only the government (e.g., federal, state, local) may bring a criminal suit.[1] But in both civil / criminal cases they are still a suit under the law seeking some form of ordered relief from the Court.
Essentially, you can think of "criminal" as a category of law and relief (e.g., prison) that is only accessible to the government.
Both the government and citizens may bring "civil" suits. Very generally, the remedies in civil suits are a court order to 1) stop doing a thing; 2) to do a thing required by law / agreement; 3) to transfer property, usually but not always money, from one party to another; or 4) to define a set of rules governing the parties going forward.
[1] There may be some obscure exception to this, but it is true for everything I've ever seen / heard of.
> If they do not have the liquidity to let people withdraw money that is another issue, but it does not seem to be the case.
Again they cannot be charged for losing billions of their own money, and there is no way to somehow consider the lost funds as "customers' money". I am all for companies getting sued due to negligence when eg they fail to protect customer data, but this is just between binance and the hackers.
So this stolen crypto is off Binance own reserves. So it could be absorbed across current accounts as long as they aren’t drawn down to below $6B? And if crypto drops they can apply cash reserves to plug the hole more easily?