Panic arises around Binance after appearance of $2 billion transaction
The massive $2 billion transaction that occurred on Binance-related addresses on the blockchain recently puzzled both experienced and newbie investors in the crypto space. Shortly after, an explanation was offered, suggesting that it is part of the exchange’s audit. However, not everyone calmed down and even VC-tier investors are seeking details.
Not part of audit
According to Mira Christanto, a VC investor and manager of a $7 billion TradFi equities fund, a large transaction cannot be a part of an audit since the methodology used by most auditors does not include signing and making any kind of transaction on the network.
I’m a fan of Binance but auditors would never ask you to move $2bn
They will be physically present and ask you to *sign a message* using the private key of addresses holding the funds. There is no requirement to move funds at all. pic.twitter.com/h0s2ZejgRh
— Mira Christanto (@asiahodl) November 29, 2022
Previously, Binance or its representatives did not provide details on the company that conducted the audit and did not comment further. Lack of transparency caused even more disruption to the industry.
Christanto added that the auditor will be physically present and would ask exchange representatives to sign a message using the private keys of addresses holding the funds. The requirement to move funds is unusual, and no such practice exists among auditors. But users quickly made a correction.
UTXO is to blame
Auditors indeed did not ask Binance to move $2 billion for whatever reason. However, some blockchain-based operations took place on the market, and such a large transaction volume is the result of a UTXO transaction scheme that sends out the whole balance to another address and then returns it after deducting the sent sum.
Technically, one of Binance’s wallets could have transferred or signed some kind of operation, which is technically a transaction for a blockchain. Because of UTXO, the whole balance of the wallet was transferred and then returned to the exchange’s address.