Coinbase, Binance and other exchanges hold at least $2.25 billion of shadow ether, as the latest lucrative innovation in digital assets ramps up. ForbesCrypto
, and they keep control of their crypto. But they have to trust the integrity of the intermediaries and the security of the platforms to safeguard their assets.This chart above tracking BETH makes it appear that Binance was worth $0.5 trillion in 2021 because of one large shadow minting of tokens.In December of 2020 Binance minted an astounding 100 million Binance ETH, known as “beths”, each representing one ether at a time when there were only 120 million ETH in existence.
Creating billions worth of staking tokens out of thin air and then destroying them, is just the latest example of a crypto company playing by its own rules. Disgraced former crypto exchange FTX, played fast and loose with disclosure rules, and more recently Binance has come under scrutiny. A Depending on the platform, it could take weeks to withdraw crypto once it has been staked. The situation has been even more extreme with Ethereum. Although staking was enabled for the blockchain in December 2020, withdrawals were not permitted until a major upgrade, known as the “Shapella update”, was completed on April 12, 2023.
Then there is the issue of exchanges making up new rules as they go along. Until April 24, Binance limited the use of beths to deposits on its Binance Launchpool, essentially an initial public offering platform that allowed users to participate in unproven crypto-related projects that the global cryptocurrency exchange was endorsing.
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