Thread by @ThomasDavies33

Binance is in deep trouble with their margin lending platform and interest-bearing "savings" accounts. Investors funds are seriously at risk of being devalued. The best that can happen? Interest rates get reduced. The worst? Investors lose a % of their invested funds. Pt1

Binance recently announced this, which has gone unnoticed by the community: binance.com/en/support/ann…

In short, Binance is admitting that the insurance fund has been bled dry by liquidations. They are now putting their own "profits" into the fund to try and replenish it. Pt2

When somebody gets liquidated, the insurance fund pays out the "investors" - the people who are staking / liquid swapping. With BTC's recent crash - billions was liquidated, and this probably caused the insurance fund to be bled dry. There is minimal reserves now. Pt3

Binance has also reduced the interest rates on Flexible savings on USDT/BUSD from 6.5% to 2%. They have done this to try and reduce expenditure, while they try and replenish the insurance fund. This is the first major warning sign of immediate danger to investors. Pt4

By paying less to investors, they are trying to avoid a catastrophe - hoping that enough time goes by without any major liquidation events, while they replenish the Insurance Fund. It's the first warning sign of trouble - happened in 2008 with traditional banks. Pt5

Their "Liquid Stake" rewards change also went unnoticed. They are now paying rewards to stakers in BNB - rather than USD. This is because they hold BNB reserves, and can't afford to pay out USD while the margin/interest platform is in dire circumstances. Pt6

The problem here is - If there is no reserves in the Insurance Fund, and another catastrophic liquidation event happens - like BTC's drop to $30k - then who pays back the investors? The insurance fund is dry already. Is Binance going to pay back investors themselves? Pt7

If $5 billion gets liquidated next week because BTC drops to $24k, can we really trust Binance to compensate investors $5b of their own money? Probably not. The most likely outcome would be that Binance would compensate investors in BNB. Pt8

The problem with that is - if everybody gets their "capital" compensated in BNB - then BNB is going to drop 50% in 24-hours as everybody rushes to sell it. This is the first warning sign of an unsustainable high-interest lending platform collapsing. Pt9

Be careful with your funds, especially money which you can't afford to lose. Binance has openly admitted the Insurance Fund is dry. #binance #crypto #btc

@RealWillyBot @DrHOSP1 @tetherino @Atmos_Black @LSDinmycoffee @CryptoCobain @TheCryptoDog @crypto_blkbeard @crypto_iso

@INArteCarloDoss - probably be interesting for you. Binance is crypto's largest trading platform.

Might be interested in this @Bitfinexed

@adamscochran might be interesting for you to investigate.