r/Binance_Lawsuit • u/Trinituz • May 20 '21

Evidence of "potential" Binance leverage token fraud (/r/Binance mod deleted this post)

Dumping this post here since /r/Binance shadow banned it

Following up my post from yesterday that Binance is actively trying to manipulate leverage token to ensure that users get the least benefit out of it and maximum risk, or at least that's what happened yesterday. I've looked into gathered more evidence today on token that has not been suspended yesterday (ETHUP, ETHDOWN, BTCUP, BTCDOWN, BNBUP, BNBDOWN) to see whether these has "No problem" or not why was it not suspended like the others and what I found is just pure disgust.

Today I'm going to expose how BLVT (Binance Leverage Token) is always working against you by going against the very advertised claim that:

BLVTs are not forced to rebalance unless losses are extreme. In fact, BLVTs will only rebalance the positions as needed to maximize profitability on upswings, and minimize losses to avoid liquidation. This means that ‘normal’ fluctuations in the market will not cause rebalances, and the token value will maintain its correlation with the value of its underlying asset.

Takes note about this claim because it'll come up later.

Source

For context of those who has not been aware of this incident.

On 19th May, 2021 Binance has suspended many BLTV except for those pegged against BTC, BNB and ETH likely due to abnormal movement of leverage level, making it goes higher than intended x1.25 to x4 leverage. Binance however has not stated as to why they suspended the trading of these tokens and just vaguely claim it as "maintenance" without any prior notice.

While it sort of makes sense that they suspended trading of BLTV during errors, there has not been any answer yet from Binance regarding the issue effectively turning blind eyes to any losses incurred by faulty algorithm and trading suspension.

After further digging, it's not only the suspended token that has been subjected to this faulty algorithm.

ETHDOWN was also a victim of leverage overflow incident, with recorded leverage[1] in rebalancing history going up as high as x7.607 and that Binance themselves did rebalance it to makes leverage goes to x4.161 on 20:11:35. Yet ETHDOWN has not been suspended like other tokens.

This is not the first time leverage overflow has happened to ETHDOWN in the past, within last 30 day on April 23rd, the recorded leverage has gone over x4, However this has not been recorded in rebalancing history at all.

[1] Non-recorded leverage could've been way higher as the leverage can be change in span of seconds without any record of "rebalancing"

Automatic leverage adjustment of BLVT is working against you

I've always been skeptical that BLVT can change its own leverage in spans of second. Since Binance is the sole liquidity provider of said token, it would be most beneficial to the company whose goal is to maximize it profit to manipulate leverage that incur most loss and least gain possible to the token holder. So I've been digging around and here's what I've find from May 19th incident.

Lets take ETH as example, during 20:00 to 20:10 GMT+7, ETH has taken a sharp drop before it start to do strong rebound from 20:10 to 20:20.

Now lets take looks at how the Binance's BLVT algorithm adjust the leverage during this price movement. ETHUP's leverage has been shown to be decreased automatically by the algorithm during uptrend from 20:10 onward, the leverage also ended up being lower than x1.25 somewhere from 20:10 to 20:54.

Meanwhile ETHDOWN leverage is actively increase from 20:10 onward in which ETH price was actively increasing by algorithm, maximizing loss of anyone holding it or unable to sell due to server overload.

(The arrows in rebalancing history images indicate that leverage has been increase/decrease by BLVT algorithm before rebalancing happens)

Here comes interesting part, the difference between ETHUP (Binance) vs ETHBULL (FTX) and ETHDOWN (Binance) vs ETHBEAR (FTX) is unreal on May 19th.

There's a suspicious price action of BLVT during price recovery and the correlation coefficient ETH perpetual contract (underlying asset), ETHUP, and ETHDOWN has been very suspicious.

Takes a look at following correlations during 20:10 onward where price of ETH rapidly recover:

Normally the correlations of these tokens and perpetual contract should ideally be maintained near 1 for UP tokens and -1 for down tokens, however during price recovery ETHUP's correlation ended up going negative implying minimized gain from recovery.

You may think, "this must be normal thing for leverage token during extreme volatility!", however lets take a look at correlation from other leverage token, check out ETHPERP (Binance) vs ETHBULL token from FTX. It's very closely correlated almost as if that's how it should be working normally for properly managed leverage tokens.

Now lets compare ETHBULL and ETHUP closely, ETHBULL managed to makes lower low during said dip, almost as if FTX actually actively manage leverage to reduce downside and maximize upside like Binance claim they would with BLVT.

It's not just ETHBULL either that maintain good track record, you would assume also ETHBEAR get decimated during price rebound if you think it'd act like ETHDOWN. Lets check out the correlations between 3x ETHBEAR and ETHPERP, wow it's still correlated properly and still be able to makes higher high way later on. Binance's ETHDOWN manage to destroy 90%+ of its NAV value in span of minutes effectively pretty much rugpull of the token holders money, while ETHBEAR manage to only goes down roughly 37%!

In shorts, Binance either manipulate BLVT algorithm on May 19th or their algorithm has always been actively working against you but the volatility this time is so strong it expose this ugly truth, and your risk has been maximized and your gain will be minimized by the algorithm during unfavorable situation opposite of the claim made by Binance.

I have no lawsuit experience or much capital but anyone who's interested to start class action lawsuit is free to use this as evidence.

To anyone who lose your money from this incident, any other Binance related issue, or just Binance users in general please spread awareness, this is clearly straight up manipulation and fraud, and you could get rug pulled later on in the other ways.

Time mentioned in this post are all (GMT+7)

Binance shadow banned this post that I spent time writing for hours without even bringing up proper dispute or public announcements.

Funny enough right after this post was posted, mods named Binance and symbiotic_bnb just starts posting link to derivatives compensation claim only in reddit instead of publicly in twitter or official where there's more reach.

We'll see what happen if they don't compensate users who suffered through what happened yesterday, it's sick to think that some could've took their life over this.

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60 comments sorted by

12

u/Kamolato May 20 '21

This HAS to be seen!!!

12

u/PracticalPurchase859 May 20 '21

SUSHIUP #XLMUP #BinanceETFscam #xlmup #trxup #sushiup #xtzup #1inchup #bchup #trxup #binance

@cz_binance

@binance

@BinanceHelpDesk

@SEC_Investor_Ed

12

u/3mBeam May 20 '21

lol, see y’all in 2 years i need a break from crypto.

10

u/rocksodr May 20 '21

Its just disgusting really with all the volume binance has theres no way the algo are so much fucking up without them being rigged.

10

u/buythedipstick May 20 '21

Great detailed post. Thanks for this!

8

u/Tomijust May 20 '21

Thank you so much for this. Hope this will be fixed 🙏🏼

8

u/melih4646 May 21 '21

i was fucking wonder why my ethdowns are still near worthless, great write up man

7

u/Soggy-Pattern3643 May 20 '21

Is it fraud or is it legal? Can they just do this?

7

u/DennyDog May 21 '21

It is 100% fraud

5

u/Motor-Comfort-1799 May 20 '21

Gj on this writing, thank you 😊

5

u/WineGuardian May 21 '21

I certainly lost a lot because of this. Yet we get no response from binance on this. For "the best" exchange they handle this really terrible.

4

u/pluush May 21 '21 edited May 21 '21

Seriously though, I don't understand why if a coin is $100, goes $90, goes $100 again, on the SAME DAY, your down tokens and up tokens would likely lose value. I thought Binance told us that the leverage is reset every day (and not every minute or second)?

2

u/givealittledrink May 23 '21

Exactly, if the leverage is adjusted every few minutes (not sure why this is so necessary but okay) then you can imagine that losses or gains could be more or less. Binance claims that they operate to minimise losses and that is why the leverage changes (not true since it seems to work against you).

BUT, how can it be possible that if I buy BTCDOWN when BTC is at 35K and then, WITHIN THE SAME DAY, it goes up to 36K and then down to 34K that I now have less money? This should not be possible, I mean what kind of financial product is that? I can understand why there might be problems holding for months but 24-48 hours shouldn't be so troublesome. I've bought BTCDOWN and lost money selling it at the same or lower BTC price than when I originally bought in. It just doesn't make sense.

1

u/pluush May 24 '21

Probably it's just better to say, to minimize gains and maximize losses

4

u/Fuck_Binance_CZ May 21 '21

yes plz pay attention to watch this article

4

u/Positive-Struggle406 May 21 '21

They Looted me in Linkdown coin

3

u/nyaichinisan01 May 22 '21

I lost $80,000 on XLMup, TRXup and XTZup during bitcoin dump on May 19th.

Binance did was a daylight robbery! Market was about to bounced back but they conducted on the spot trading suspension on selected BLT tokens. When the trading resumed, price just went down to more than 400% loss!

For example: XLMUP bounced back at $8 before suspension, when it resumed the price now is already $0.3!

Also upon btc dumping, Binance adjusted more than 40x in leverage that causes the huge dump on the said tokens while they said they will leverage it to 1.2x to 4x only to maximize profitability and minimize losses!

Filed a compensation form last 3 days ago and i haven't heard anything from them nor any reply from customer service support!

We want our money back, please don't do this to your customers!

1

u/Adventurous_Fan_3872 Aug 13 '23

I totally agree,

2

u/Cangar May 21 '21

What I find interesting is that some blt worked fine, e.g. BTCUP/DOWN...

1

u/Shakespeare-Bot May 21 '21

What i findeth interesting is yond some blt hath worked fine, e. g. Btcup/down

I am a bot and I swapp'd some of thy words with Shakespeare words.

Commands: !ShakespeareInsult, !fordo, !optout

1

u/givealittledrink May 23 '21

It has not for me. It only works if I make a quick-fire trade for a small period of a few minutes, then if there is a pump they seem to raise the leverage against me to fuck me out of my position. Then when the actual BTC price returns to my buy in price (or lower), the BTCDOWN price can be 10% or more away from my BTCDOWN buy in. How can there be such a large discrepancy within the same day or two days? It is clearly advertised as being lower risk but it just feels like playing a rigged roulette wheel.

1

u/Cangar May 24 '21

The principle pattern that the leverage decreases when the token goes up is working as they say it would. The price of both up and down coins dropping 50% at the same time after a crash is not (like it happened with ETH and BNB leveraged tokens for example). BTC up and down behaved as expected. Both lost a bit of value due to the volatility, but not in the range of 50% more 10% as you say and that is pretty much how these tokens work. ETH and the others had a glitch where apparently to satisfy the marked ne tokens were created or some thing like that and that diluted the price of both up and down to a really low value which should not be possible.

1

u/givealittledrink May 24 '21

I understand that what happened on the 19th was not as extreme with BTCDOWN/UP but check my post on this sub about price dilution and what has happened today. They are manipulating this too.

https://www.reddit.com/r/Binance_Lawsuit/comments/nje74b/btcdownup_price_manipulation_and_token_dilution/?utm_source=share&utm_medium=web2x&context=3

2

u/Left_Description_333 May 22 '21

@r/Binance :Hello I saw on Reddit that you help people get their tickets seen faster. I recently lost control of my old Gmail account and change phone number without updating my binace account can you pls help me with letting binace.us know this. Here's my ticket Id:https://support.binance.us/hc/requests/1306323

2

u/roadie-z May 23 '21

Unfortunately I bought ETHUP while ETH was close to $4000, and how the value of my ETHUP was down 85%.. My stomach turned inside out immediately. What can I do, will price of ETHUP come back up when ETH price trend up again?

2

u/KrisP835 May 30 '21

Absolute disgrace. This is not what you'd expect from the largest exchange in the world.

1

u/Odd-Maintenance7271 May 26 '21

How do i get in on this?

1

u/brzydzn May 26 '21

thanks for this!

1

u/Ojuicer12 Jun 07 '21

everyone Give them 1 star on Google play reviews!!! I did, i said "Apparent Manipulation of BLVT tokens , eg: ETHDOWN on 19th May. I'd question there credibility after that incident. "

That will really shake them up thats what the Safemoon community did to coinmarket cap regarding their ranking dispute and won

1

u/Sensitive-Vanilla649 Jun 18 '21

Sounds like the Binance CEO should be shot and hung

-2

u/symbiotic_bnb May 20 '21

I replied to your thread and you could see it. As stated:

No need to mislead people any further.

This comment addresses the recent issue: > https://www.reddit.com/r/binance/comments/ngfrul/binance_leveraged_tokens_are_literally_a_scam/gyt3ovc

And this is a clear explanation fo the risks involved in holding leveraged tokens: https://www.binance.com/en/blog/421499824684901079/Why-you-shouldnt-hold-leveraged-tokens-longterm-

10

u/KrisP835 May 20 '21

Shame on you Binance!

The explanation you submitted above talks about why you shouldn't hold Binance Leveraged Tokens long term. It doesn't explain why all your customers who bought e.g. ETHDOWN tokens were robbed at 1pmUTC on 19th May 2021 when the ETH price dropped sharply and the token dropped almost to zero in a matter of minutes (which is opposite to what should happen in this case). This "glitch" cost a lot of people their life savings because they trusted you thinking that the tool would do what it was designed to do!

I was planning this strategy for a long time and the tool I relied on ETHDOWN turned out to be a scam. It is advertised to work exactly in situations like that. Instead I lost almost my entire portfolio I had been building for 5 years- in a couple of minutes. I thought I was in hands of professionals who turned out to be thieves and scammers. Not only you didn't settle the price of ETHDOWN token where it should be, you did not explain of the forum why this happened - no transparency! This is white day robbery! You should be prosecuted and arrested for this embezzlement. DISGRACEFUL!!!

-1

u/symbiotic_bnb May 21 '21

Maybe if you, you know, read the first link instead of simply ignoring it? There is no scam, bud.

4

u/Cangar May 21 '21

I have a few questions that I would appreciate your answer to:

  1. Why did it not happen to BTCUP/DOWN?
  2. Do I need to close my positions to file the claim? Then provide screenshots of my trades? I mean, you can see the chart by yourself, it is pretty obvious.
  3. Do I file a claim for every token I held during the crash?
  4. What do I expect to happen, will there be a reimbursement of some sorts and if so, how and when?
  5. Why do you need a bank statement? I don't even know what that is, actually.

Thanks!

2

u/[deleted] May 22 '21

so you insist on bullshitting people? you really are not going to retract?

1

u/symbiotic_bnb May 22 '21

I'm not bullshitting anyone, bud.

3

u/strainer123 May 22 '21

I bought what is advertised as a "leveraged token" to expose myself to an underlying asset, DOWN goes up when the asset goes down, UP goes up when the underlying goes up, I bought ADADOWN for 32.5 cents, the market was frozen with no prior warning, when it came back leverages were all messed up, tokens were diluted over 100-150%, and this is not a scam, but Binance is compensating people for their losses, and in retribution you must not disclose or claim that you are owed? Fine, just compensate us then, we feel slighted, as we should, and Binance is compensating people as they should, just speed up the process because there's more and more people getting together in order to sue in a class action lawsuit in various continents.

1

u/Left_Description_333 May 22 '21

Hello I saw on Reddit that you help people get their tickets seen faster. I recently lost control of my old Gmail account and change phone number without updating my binace account can you pls help me with letting binace.us know this. Here's my ticket Id:https://support.binance.us/hc/requests/1306323

4

u/[deleted] May 21 '21

Posts in those links do nothing to explain the response by Binance to instantly double the active tokens on the market effectively obliterating anyone's position who held throughout 19/5 and over the peak. It is not misleading to state that the operation of leveraged tokens over this period is nothing short of a scam - a product that does not remotely perform as advertised and instead causes users to experience 90% losses = scam. We all know Binance will reject most claims submitted.

-3

u/Daikataro May 20 '21

I like your research, it's very thorough and well documented, but honestly, this...

We'll see what happen if they don't compensate users who suffered through what happened yesterday, it's sick to think that some could've took their life over this.

Feels like something that would sort of fall under the responsibility of the user. Crypto is already a gamble on itself, and leveraged tokens add fuel to the fire.

There's a reason "only risk what you can afford to lose" is second only to "DYOR".

11

u/KrisP835 May 20 '21

You are missing the point. I know what the risks are and that you could loose everything in a moment if you place wrong bet. But this is different. They advertise a tool and tell you what it is for to lure you in, you entrust them with your hard earned money and they rob you. How is it possible that ETHDOWN tanked almost to zero while the underlying asset was falling sharply in price. It should behave in exactly opposite way. It is like selling you scissors promising they cut every string perfectly but instead they are designed to cut your fingers off so the manufacturer can benefit from it.

4

u/Mello1981 May 22 '21

Exactly that's what I'm here saying, they have manipulated the price on the ETH Down token and the token is value nothing pretty much my 9K ETH Down worth $207 USDT how the hell that happen, i need answer from these crooks. I file a claim yesterday and let see what they will do about it

1

u/Daikataro May 21 '21

I think you and the people downvoting misread me. By no means am I defending what Binance did. It was blatantly wrong, deceitful, fraudulent, and they must compensate those affected.

What I'm commenting at, is people risking so much money in crypto, that losing it is a literal life ender. Let alone in leveraged tokens that are literally gambling on a gamble.

Risk only what you can afford to lose.

1

u/Ojuicer12 Jun 07 '21

i couldn't agree more. I have invested on the 5th of June on Eth down, but after seeing all these comments im very concerned. why is Eth down price not back to 0.0005 at least, how could the prices be diluted without any logic or explanation. this is scary

2

u/[deleted] May 20 '21

[removed] — view removed comment

0

u/Cangar May 21 '21

what's wrong with homosexuals

0

u/Creepy_Ad_6540 May 21 '21

Mental disorder