• What Went Wrong That Caused Binance Helium’s $22 Million Accounting Error?

  • Four Binance.us clients earned nearly $22 million in bitcoin after the cryptocurrency exchange mistakenly credited holders of Helium’s new MOBILE token with the more valuable helium (HNT) token instead.

    The majority of the incorrectly credited HNT appears to have been sold on by their lucky recipients, with the unintentional payout coinciding with a selloff that saw HNT’s price fall from over $7 to an 18-month low of roughly $3.33.

    While Binance has fixed the problem that caused the accounting error, it has lost $22 million at today’s HNT price, or $263.4 million when using HNT’s all-time high of $54.88. (set back in November 2021).

    However, on-chain analysis tends to imply that Binance.us was forced to confiscate HNT lawfully held by its other customers in order to ‘respect’ the HNT it had wrongly ascribed to the four lucky recipients.

    An Error Comedy

    What’s most noteworthy about Binance’s error is that it lasted for quite some time, from August 23 to September 15. In other words, it lasted 23 days until someone at Binance noticed it. We were aware of what was going on, and the exchange put an end to it.

    For whatever reason, Binance’s systems contained a fault that enabled Helium’s new MOBILE token to be classified as HNT, which is far more valuable. In fact, one MOBILE token is worth one-thousandth of an HNT token.

    As a result, when four wallets deposited $4,829,043 MOBILE on Binance.us, the exchange credited the same amount in HNT to these wallets.

    It was at this moment that these people, whom podcast host Arman Dezfuli-Arjomandi refers to in the above thread as “attackers,” began slowly selling their newly obtained HNT tokens. Given the massive supply they had received, the price of helium naturally fell.

    But it wasn’t just an accounting error that contributed to Binance’s disaster.

    Us has now found itself in this situation.

    Another important factor is that it earlier stopped combining its users’ HNT deposits to a single primary exchange address, which would have allowed it to keep better track of what was going on.

    Surprisingly, the exchange abruptly swept its users’ HNT deposits on September 1, just eight days after the accounting error began to take effect and the four lucky MOBILE wallets began progressively selling off their new assets.

    However, it appears that the HNT swept to Binance.us’s own address was substantially withdrawn by these four individuals, with 4.5 million HNT being moved elsewhere (e.g. Binance.com) and sold.

    The exchange didn’t realize anything was wrong until its 4.5 million HNT wallet was reduced to only 310,000.

    However, now that the problem has been fixed, it owes its users approximately 4.8 million HNT, which it will most likely have to purchase on the open market.

    Helium (HNT) Price Increases Following Disclosure of Binance Accounting Error

    Needless to say, the current position is not favorable for Binance.us or Binance. On the other hand, it could be beneficial for HNT, which has surged in the hours since word of the mishap spread.

    HNT has risen from $3.93 to $4.62 since September 16 (when it initially became public knowledge). This is a 17.6% increase.

    This is most likely due to two factors: 1) Binance has begun purchasing HNT in order to recompense its users; and 2) traders have begun purchasing HNT because they believe Binance will be required to purchase approximately 4.8 million of the tokens.

    Of course, as much as this increase is wonderful for anyone who still has access to their own HNT, it raises serious concerns about the dependability and security of Binance.us and Binance in general.

    The fact that Binance has yet to officially address the error does not help its credibility either.

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