Crypto Exchange Giant Binance to Launch Decentralized Exchange

Pratik Makadiya

Binance, the world’s largest crypto exchange by trading value, publicised that it will launch its “tailored blockchain”, for trading digital currencies. The new network is dubbed “Binance Chain” and it is a step forward in building a decentralized exchange (DEX).

Bitcoin gained popularity due to its decentralized nature. However, cryptocurrency trade until now was mostly managed by centralised exchanges. The new Binance Chain will offer traders a decentralized exchange which does not require any third party such as exchanges to hold funds.

Binance, the cryptocurrency exchange giant, noted on its blog that:

“As a public blockchain, Binance Chain will mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets”

Binance Blog

The company in it blog post stated that the company launched Binance Chain after “extensively researching decentralized exchange frameworks and analyzing existing implementations,”

With the use of decentralized exchanges, traders will not need to consign their crypto assets to centralized crypto exchanges. Centralised exchanges are vulnerable to hacks, which the crypto industry has repeatedly seen. The largest hacks in the industry include the Mt. Gox hack and the recent Coincheck hack of over $500m.

The Binance decentralised exchange will not be the only one in the market. EtherDelta is another DEX, that operates on Ethereum Blockchain, permits traders to trade ERC20 tokens in a decentralized manner. However, many regard the speed to be too slow and the liquidity insufficient. 

DEX Not Immune To Hacks

Decentralized exchanges are safe compared to centralized exchanges. However, DEX is not completely immune to hacks as their web hosting is centralized. DEX platforms have not gained much popularity as the can only trade digital assets that operate on the same blockchain. However, the introduction of Lightning Network - the “second layer” payment protocol, enables cross blockchain trades, it is still in its development stages.  

The Hong-Kong based company Binance have not clarified how it will operate its DEX platform along with its centralized exchange. Although it highlighted that more information will be revealed soon.

The company stated, “Centralized and Decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence,”

According to Bloomberg, hackers have managed to steal $700 million worth of digital assets since January. These hacks have put pressure on governments to further regulate the crypto market. Just days back, Binance was able to fend off a large scale phishing hack.

Binance Coin (BNB), is Binance’s cryptocurrency which is as an ERC20 token, will be Binance Chain’s native asset. For now, the new decentralized exchange is in its development phase. Binance has not mentioned when the exchange will go live. The news reflected well on the BNB price and saw a surge of about 25%.

Purported Former Cryptopia Developer Claims Hack Was an Inside Job

Samuel Haig

A purported former developer at the hacked cryptocurrency exchange Cryptopia has recently claimed through a blog post the security breach was an inside job.

Cryptopia Operates as Hobby Project Until 2017

According to the author of the post, they and fellow co-founder, Adam, began working on a then-fledgling project called Cryptopia during January 2014.

Following the launch of the exchange in December 2014, the pair would work Cryptopia during their free time. During 2015 the author resigned his full-time job to devote himself to the project, with Adam also resigning from his position as a developer with a company called Intranel shortly thereafter.

The author states that Intranel did not want to lose Adam, and offered the pair a room in their office to rent which was paid for “by Adam doing sprint code work for Intranel.” The author also notes that Intranel showed an interest in Cryptopia “very early on,” however, the pair did not see any need for the company to get involved at that time.

However, by early 2017, a year in which most cryptocurrencies reached a new all-time high, the author states that Cryptopia began to experience “exponential growth at a scary pace,” with the pair subsequently starting to “take Intranel’s offers more seriously” as neither of the Adam nor the author identified themselves as “business men.”

The author states that Intranel made an offer for 20% of the company in exchange for handling “all of the business management and development, things like helping hiring and managing staff, paying tax, lobbying for regulator guidance, all the ‘boring business stuff’.”

Intranel Allegedly Muscles Control Over Cryptopia

The author asserts that Intranel “immediately set to playing games of divide and conquer,” and “put their staff in key managerial positions to allow themselves degrees of autonomy without seeking shareholder or director consent.”

After becoming reliant on the work and staff provided by Intranel, the author states that the company demanded a further 5% of Cryptopia’s shares, threatening to “leave [the pair] high and dry with [their] arrangements.”

The debacle led Adam to resign, with Intranel suggesting that the author “take a holiday” to avoid getting burned out. While away, Intranel ceased payments to the author and began to take further action without shareholder or director consent, including issuing “themselves a loan for approximately $300,000 from the company to them personally for ‘startup costs’.”

The author also alleges that Intranel attempted to sell the company out from under them on three separate occasions.

Author Alleges Hack Comprised an Inside Job

The author states that after Intranel was “forcibly” removed during November 2018, it became apparent that the Cryptopia was on the verge of bankruptcy, stating: “no one had any idea the dire situation they had gotten the company into, or that it would not have been able to afford their own next invoice.”

The author concludes by accusing Intranel of orchestrating the hack that devasted the Cryptopia, stating:

I believe the Hack was orchestrated to bury everything they have done, and was planned to happen before we removed them so that it could tidily explain the state they had gotten the company into. And then rushed after their plan was interrupted when they were forcibly removed from the company.

According to a report by Grant Thornton, Cryptopia’s assigned liquidator, the exchange owed a total of $4.22 million to its creditors