Binance Shanghai office reportedly raided, Binance denies having a Shanghai office
There are two sides to every story. Here are both of them, so you can choose your preferred reality.
All up, the cryptocurrency markets shed about US$5 billion of value.
Fortunately, these allegations have spawned a lively debate, the entertainment value of which has been appraised at about $5 billion, so it all evens out.
Rumours, half-truths and other facts
Binance CEO Changpeng "CZ" Zhao responded to the reports by saying on Twitter that there was no raid, there were no police and Binance never had a Shanghai office.
This appears to have come as something of a surprise to a lot of people who say they're pretty sure Binance does, or did, have an office in Shanghai because they've been there. It also conflicts with Chinese media reports which refer to the existence of a Binance office in Shanghai.
It's worth noting that this isn't necessarily an open-and-shut debate. It's an evolving situation, with lots of conflicting information.
Choose your own adventure
The raid on Binance's Shanghai office may have been any number of things. It could have been a precautionary move, a compliance check-up, a matter related to a specific investigation or an individual employee, and so on.
The question, then, is why Binance is denying that an office exists at all? Based on this, one might speculate that the situation more broadly reflects uncertain and rapidly shifting attitudes towards blockchain and cryptocurrency in China, and that there's a lot going on behind the scenes here.
When China doubled down on its commitment to blockchain last month, one of the effects was that Bitcoin started flying, while some China-focused cryptocurrencies saw quick pumps of 100% and more.
This was problematic, as China's attitude to the space is firmly in the "blockchain, not cryptocurrency" side of things. The pumps showed that it's difficult to separate the two, and that orderly progression of the blockchain industry, as mandated by the government, would not be possible without a deliberate effort to rein in the cryptocurrency markets as a whole.
In this case, those efforts took the form of a raid on Binance's office in Shanghai.
This did not happen
There are a lot of reasons why fake news enters the system, and a lot of reasons for it to spread quickly. You can't be the world's number one cryptocurrency exchange by volume without looking over your shoulder.
As CZ said, several rival exchanges and other competitors employ teams with the specific goal of funding and pumping out harmful, but often false, information on Binance in an effort to gain a competitive edge. This is an unfortunate and distasteful, but also quite common, tactic he said.
This is a reflection of two unfortunate trends in journalism. One is a shift towards "clickbait" headlines, which have a tendency to blow situations out of proportion. Remote workers turn into an office, and a police visit becomes a raid.
The other is the tricky question of how financial incentives in journalism pollute the fountain of truth. Trusted media outlets, which are solely reliant on traffic and advertising dollars, can easily become partisan propaganda mouthpieces when that's the only way of keeping the lights on. These factors can then combine with social media to exaggerate and distort facts.
This situation may be an example of how easily bad information can spread.
Disclosure: The author holds BNB, BTC at the time of writing.
- SEC crackdown on Binance, Kraken – What it means for Aussie investors
- Sam Bankman-Fried found guilty – what it means for Australian FTX victims
- Bitcoin’s price soars over 10% on ETF rumours – here’s why
- New regulations for Aussie crypto exchanges: What it means for investors
- Sam Bankman-Fried’s FTX trial starts tomorrow – what it means for FTX customers