Is it a lie or a show that the trading rules of Coin Security are suspected of harming investors' interests?

On July 12th, Coin An announced that "the Coin An team will give up their BNB share and join the BNB destruction plan." Many investors understood this as a significant reduction in the circulation of Coin An Ping Taiwan Dollar BNB, and BNB prices rose in response

On July 12th, Coin An announced that "the Coin An team will give up their BNB share and join the BNB destruction plan." Many investors understood this as a significant reduction in the circulation of Coin An Ping Taiwan Dollar BNB, and BNB prices rose in response. However, it was later discovered by multiple media outlets that investors were simply deceived by the grandiose rhetoric of Coin An. Coin An's change in the repurchase and destruction rules this time did not fundamentally bring any benefits to the circulation scale of BNB, but could instead become a tool for internal self-interest within its team.

Li Lin, the founder of HuoCoin, stated that according to the new regulations released by Coin An, "the circulating funds are no longer in the hands of the team, which means there is no need for repurchase. According to the data, they are directly deducted from the reserved funds, reducing repurchase costs by several billion yuan per quarter..." More investors question Coin An's policy of directly distributing the funds originally used for repurchase in the secondary market to their own teams. Huo Coin Global CEO Weng Xiaoqi and OK Key Account Manager Jiumei also raised doubts about He Yilian, the co-founder of Coin An.

In summary, the change of the repurchase and destruction rules by Coin An does not fundamentally benefit the circulation scale of BNB, but may instead become a tool for internal self-interest within its team, and even have a negative impact on BNB's market circulation.

Fact 1:Destroying the BNB of the management team will not further reduce the circulation of BNB, but there is a suspicion of "prioritizing high price cashout by the Coin Security team" and may even increase the circulation of BNB in the market

According to the token issuance rules in the BNB white paper, Coin An will issue a total of 200 million BNBs, including 20 million for early private equity investors, 100 million for ICO public offerings, and the remaining 80 million obtained by Coin An's management team. They will be unlocked and released over 5 years, with 16 million unlocked in each phase. And BNB has set up a clear repurchase and destruction mechanism, with 20% of the profits of the Coin An trading platform being used for repurchase and destruction of BNB.

The official statement for the change in the repurchase and destruction mechanism of Coin An this time is that it will abandon the BNB share held by the management team and join the BNB quarterly destruction plan. At first glance, it seems that due to the "abandonment" of the management team, the number of BNBs destroyed in the quarter will increase, and the total circulation of BNBs will further decrease, forming a positive market situation.

However, in fact, while destroying the BNB held by its management team, Coin An no longer fulfills its obligation to repurchase and destroy BNB from the circulation market, rather than increasing the management team's share of BNB for destruction on the basis of the original repurchase destruction volume. That is to say, the number of BNBs repurchased and destroyed by Coin An has not changed every quarter, but the source of BNBs repurchased and destroyed has changed.

Taking a closer look, is the BNB of the management team responsible for the destruction of Coin An's repurchase already unlocked and entering the circulation market, or has it not yet been unlocked?

If the repurchase destroys BNB that has already been unlocked

Firstly, the Coin Security team has determined to repurchase and destroy BNBs worth $23.839 million based on this quarter's earnings. Calculated at the BNB price on the repurchase and sale date, a total of 808888 BNBs need to be destroyed.

So regardless of whether Coin An repurchases and destroys BNBs from the management team at the current BNB USD price, or directly destroys newly unlocked BNBs that have not yet been allocated to the management team, the result is a decrease of 808888 BNBs in the circulation market. Compared to the original mechanism, there has been no change in the circulation of BNB, and we really cannot see the "progress" emphasized by Coin An.

In addition, the statement that the new mechanism emphasized by He Yiyi is to "avoid the BNB in the hands of the management team from exerting pressure on the market and further stabilizing the market" is not particularly convincing. In order to avoid the pressure caused by a large number of BNBs being unlocked, there are many other options available, such as further releasing the unlocked BNBs on a monthly or weekly basis, or setting new lock-in incentives. Directly repurchasing BNBs in the hands of the management team is not the only option. However, in the market where BNB prices have surged, it is difficult for the Coin An team to escape the suspicion of "prioritizing the high price realization of BNB held by their management team" if they choose to repurchase BNB.

As for whether the claim made by Coin An that the BNB in the hands of the management team was directly destroyed and not repurchased from the management team in US dollars is true, it may be a matter of opinion. Imagine for the management team of Coin An, the previously promised "dividends" of the company were suddenly confiscated, and I'm afraid it could have been crying for days and nights. This is obviously not a feasible solution within the company. Of course, if Coin An promises internally to return the funds for repurchasing BNB to the management team in other ways, it is another matter.

If the repurchase destroys BNB that has not been unlocked yet

At present, we can only understand that Coin An promised in the white paper to unlock 16 million BNBs annually to the management team, but Coin An did not disclose the specific unlocking situation of its management team's BNBs.

Unfortunately, we have not found the open source code for the lockdown smart contract in BinanceChain's open source code, and we are unable to make further judgments.

If the so-called lockdown of Coin An is not decentralized through smart contracts, but is manually allocated, then Coin An is fully capable of destroying the BNB that has not yet been unlocked. That is to say, there were originally 120 million BNBs in circulation in the market, and the team locked in 80 million BNBs. Under the original repurchase mechanism, Coin An destroyed the BNBs circulating in the market, reducing the actual circulation volume and facilitating the price increase of BNBs; However, under the new mechanism, if the coin security repurchase destroys the BNB that should have been in a locked position, the actual circulation of the BNB market has not decreased. Compared to the original repurchase destruction mechanism, it has actually increased the circulation in the market. So this may be the most intriguing scam of the year.

Fact 2:Coin An has quietly revised the white paper to no longer specify that 20% of the profits will be used for repurchasing and destroying BNB

In the initial version white paper of BNB released by Coin An in June 2017 (also known as BNC at the time), it was explicitly promised to repurchase and destroy BNC at a quarterly profit of 20% on the trading platform.

However, around April this year, Coin An quietly revised the content of the white paper, and in the new "repurchase destruction" mechanism, Coin An no longer provides a clear statement about the specific number of BNBs destroyed.

In fact, attentive friends may have noticed that in the first quarter of 2019, when Coin An released a repurchase announcement, it explicitly stated that it had used the platform's 20% profit to repurchase an equivalent amount of BNB, but it was not mentioned again in the latest Q2 repurchase announcement.

Although He Yi still claimed in unofficial occasions that BNB's buyback destruction was still carried out in US dollars equivalent to 20% of the platform's profits, the "repurchase commitment" that was no longer included in official announcements clearly significantly reduced its credibility.

Fact 3:There are multiple mismatches between the announcement data on the official website of Coin Security and the browser data, making it difficult to verify the authenticity of the data

During this research process, we found that there are differences between the data on the number of BNBs in the Binance browser and the data in BNB's previous announcements. As for whether the management team of Coin An was too careless and caused the data display problem, or whether there is another deep-seated reason, it is unknown and further response from the Coin An team is needed.

Conflict 1: The historical destruction quantity in the eighth destruction announcement does not match the quantity in the seventh destruction announcement

Conflict 2: The historical destruction data in the Binance browser does not match the data in the Coin Security announcement

*The main network of Coin Security was launched in 2019, and currently has only a history of nearly half a year in the main network records

Conflict 3: The total supply displayed by Binance browser is inconsistent with the official caliber of Coin Security

Based on the above aspects, Coin An first secretly erased the official promise to repurchase BNB at a 20% profit, and then replaced "repurchasing and destroying BNB from the public market" with "repurchasing and destroying BNB from the management team". Moreover, the number of BNB destroyed in its official propaganda statement did not match the number of browsers in many places.

At a deeper level, whether Coin An is truly confiscating the BNB of the management team or secretly operating to help the management team cash out at high prices, it is not a good thing for the long-term development of Coin An, let alone something worth promoting.

In addition, there is another noteworthy issue in this WeChat group battle. During the group questioning session, Ms. He Yi, former partner of LinkVC, raised a thought-provoking question: "As a member of the Coin An ICO white paper, I would like to ask if the one thousandth promised to the big family at that time was equity or currency

The so-called "one thousandth" incident is actually an open secret among early industry leaders. When Zhao Changpeng, the founder of Coin An, was preparing to become an ICO for Coin An, he realized that in order to become famous, multiple big shots were needed as advisors to support him. Therefore, he promised many industry seniors at the time that being a consultant for Coin An would receive one thousandth of BNB as a reward.

But when Zhang Li, one of the consultants, brought up the old story again, He Yi, the co founder of Coin An, stubbornly retorted: Excuse me, is there a contract? And publicly stated that if the consultant wants to receive BNB compensation, they must have a contract and go through legal procedures.

Regarding this, we saw the response from Zhang Li that everyone agreed to become a consultant at that time based on their trust in Zhao Changpeng and did not sign a formal contract. However, they all retained the recording materials and witness testimony at that time, stating that they were willing to accept legal proceedings for resolution.

We can't judge whether the property dispute lawsuit between Zhang Li and Yuan An can be fought and won. After all, Yuan An's high-profile battle with its former shareholder Sequoia Capital has not reached a conclusion.

We must objectively admit that the early development of the blockchain industry was a stage of savage growth, and the rise of Coin An was precisely due to its bold and powerful style. Whether it was the "counter regulatory" rapid ICO in China's 94 new regulations calling for Ceasefire Coins and OK China business, or the US SEC's demand for Poloniex and Bittrex to take down a large number of securities assets and "commit crimes" to provide a large number of securities currencies to US users, It can be said that Coin An is good at breaking rules and has indeed achieved rapid development through it.

As one of the top companies in the blockchain industry, it is obviously difficult to achieve further development if the industry continues to use the spirit of contract as a meaningless slogan to deceive the public and seek benefits by exploiting users' cognitive gaps.

This article originates from Technology Finance Online

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