Panic arises around Binance after appearance of $2 billion transaction
A massive $2 billion transaction that happened on the blockchain to Binance-related addresses recently puzzled both experienced and novice investors in the crypto space. Shortly afterwards, an explanation was offered, suggesting that it was part of the exchange. audit, However, not everyone has calmed down and VC-level investors are also demanding 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.
Previously, Binance or its representatives did not provide details about the company being audited and did not comment further. The lack of transparency created even more disruption for 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
The auditors did not actually ask Binance to move the $2 billion for any reason. However, few blockchain-based operations took place in the market, and such a large transaction volume is the result of a UTXO transaction scheme that sends the entire balance to another address and then returns minus the amount sent.
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.
