Four customers of Binance.us unexpectedly received a total of almost $22 million in bitcoin after the cryptocurrency exchange accidentally credited holders on Helium’s mobile Application token the more valuable helium (HNT) tokens instead.
Since the surprise payout occurred at the same time as a sell-off that caused HNT’s price to drop from over $7 to a low of about $3.33, it seems that lucky recipients have sold the majority of the HNT that’s been unintentionally credited.
Although Binance corrected the problem that led to the accounting issue, their error has cost the firm $263.4 million while using the HNT all-time high of $54.88 or $22 million at the current HNT rate. Despite fixing the flaw that caused the accounting error, Binance has still lost $22 million at the current HNT pricing, or $263.4 million using the $54.88 all-time high for HNT (set back in November 2021).
It gets worse, though, because on-chain analysis seems to suggest that Binance.us was forced to steal HNT that was rightfully held by one of its other customers in order to “respect” the HNT it had incorrectly assigned to the four fortunate beneficiaries.
According to those with direct knowledge of the situation, an accounting error at Binance resulted in a windfall for some users in Helium Network’s native HNT coin and left the largest cryptocurrency exchange in the world with a multimillion-dollar deficit. According to the sources, Binance has lost 4.8 million HNT coins that were mistakenly distributed to users, who mostly traded the tokens for a profit right away. These assets were valued at around $19 million.
According to the sources, Binance’s tracking of token deposits from the well-known decentralized internet connectivity project helium network appears to be the cause of the incorrect payouts. On helium, there are two types of tokens: the Helium’s native HNT token, which it pays hotspot hosts, as well as the mobile token it pays 5G infrastructure operators, which only launched last month but lacks a liquid market and consequently, any quotable price.
The two tokens like ERC 20 or ETH tokens of Ethereum, although having a tight relationship, are separate assets. Binance mistakenly classed them as one: HNT, depositors got an equal value of more valued HNT when HNT sent MOBILE to Binance addresses. However, not until 4.8 million HNT coins were used instead of MOBILE that the error was fixed. The timing of the dividend matches a big sell-off of HNT tokens, which sent the price of the asset down from around $7 to where it is now i.e $4.
The helium coin generates life while continuing to descend in the parallel channel on the daily basis. Customers can deposit HNT coins under this pattern to protect themselves from additional violence.
A Comedy Of Errors
The most notable aspect of Binance’s error is that it lasted for a considerable amount of time, from August 23 to September 15. It continued for 23 days before anyone at Binance, in other words. The United States became aware of what was going on, and the exchange put a stop to it.
For some reason, a fault in Binance’s algorithms prompted it to mistakenly identify Helium’s new MOBILE token as HNT which has a far higher value. In fact, the value of a MOBILE token is less than one thousandth that of an HNT token. As a result, the exchange credited four wallets with the identical amount in HNT when they each made a deposit of about 4,829,043 MOBILE onto Binance.us.
These people then started gradually selling their just obtained HNT coins, Arman Dezfuli-Arjomandi was the host of the podcast, to the thread above as “attackers.” This naturally resulted in a decrease in the cost of helium given the massive supply that they had acquired.
However, other issues contributed to the mess that Binance.us is currently in, not only an accounting error. Another important aspect is that it previously stopped pooling its users’ HNT payments to one central exchange address, which would have allowed it to monitor events more effectively.
It’s interesting to note that on September 1, the exchange abruptly swept the HNT deposits of its users, some 8 days after the accounting error had started to take effect as well as the four fortunate MOBILE wallets had started gradually selling off its new funds. However, it appears that these four people withdrew the majority of the HNT supplied to Binance.us’s own address, and 4.5 million HNT got moved to other addresses (such as Binance.com) and sold.
The exchange didn’t realize what was happening until its wallet, which had 4.5 million HNT in it, had shrunk to just 310,000. However, now that the problem has been fixed, it owes its users roughly 4.8 million HNT, which means it will likely have to purchase this amount just on the open market.
Following The Disclosure Of The Binance Accounting Error, Helium (Hnt) Is Up
It goes without saying that the current state of affairs is not favorable for Binance.us either Binance. But on the other side, it may be advantageous for HNT, whose stock price has increased in the hours after word of the accident first spread.
HNT’s price has increased from $3.93 to $4.62 since September 16 (the day it initially came to public attention). This is an increase of 17.6%.
This is most likely due to two factors: Binance launched HNT to recompense its users, and traders have started stockpiling the token since they believe Binance would be required to buy 4.8 million of them.
As encouraging as this increase is for those who still have access to their personal HNT, it does, of course, raise serious concerns about the security and dependability of Binance.us and Binance more broadly. Additionally, Binance’s failure to publicly address the error hasn’t done much to improve its standing.