A recent investigation by Forbes, assisted by Gray Wolf Analytics and Inca Digital, suggests discrepancies between Binance’s ICO in 2017 and their original whitepaper.
According to the analysis, Binance only sold 10.78 million BNB tokens during their ICO instead of the planned 100 million. This would mean they raised less than $5 million, far below their $15 million goal. The allocation to angel investors appears to have doubled from 20 million to 40 million tokens.
In total, it seems only 55 million tokens were distributed during the ICO and to angel investors, not the 120 million planned. Despite this, Binance still claimed to have raised $15 million, implying an initial price per token of $0.15.
Of 306 ICOs analyzed between 2016-2018, 45% retained unsold tokens while the rest redistributed or burned them. Binance’s approximately 65 million unsold tokens at the time were worth $10 million, but are now valued at $14 billion with BNB at $214. Since 2017, Binance Labs has reportedly invested in 199 companies, potentially using BNB tokens as part of these deals.
Currently 154 million BNB tokens are in circulation. In the past 6 years, Binance has burned an additional 48 million tokens. According to Gray Wolf Analytics, Binance controls 76% of the supply, equating to around 117 million tokens. Binance’s deployer wallet, controlled by the company, received the entire initial supply but appears to have distributed only 55 million tokens in the first year, not the 120 million stated.
In total, only an estimated 2000 wallets or individuals participated in the initial BNB token launch, much less than expected. In summary, the investigation found significant discrepancies between Binance’s ICO details and the actual distribution and allocation of BNB tokens. This raises questions around the token’s launch and circulating supply.
How could this impact BNB price long-term?
Here are some thoughts on how the findings from this investigation could impact BNB’s price long-term:
- Loss of trust: The discrepancies uncovered could hurt investor trust in Binance and BNB, especially around supply details. This lack of confidence could put downward pressure on price.
- Regulatory scrutiny: Questions around the ICO and token allocation may lead to increased regulatory scrutiny of Binance. The threat of penalties or sanctions could negatively affect price.
- Reduced circulation: With Binance controlling a larger portion of supply than expected, there may be less BNB freely circulating and traded. This reduced liquidity could increase volatility.
- Fundamentals unchanged: Despite the concerning findings, Binance is still the top exchange by volume and BNB has utility on the platform. The core business fundamentals supporting the token’s value remain intact.
- Resilient brand loyalty: Many Binance users have remained loyal despite previous regulatory run-ins. This resilient support community could help deflect long-term impacts to price.
- Controlling supply: Binance still dictates token burning and has flexibility in how much BNB they release. This supply control gives them tools to stabilize and support price if needed.
Overall, the investigation findings raise uncertainty about BNB, but Binance retains levers they can pull to limit damage. While some loss of trust is likely, the token has proven quite resilient in the past.
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