Binance prevents exit fraud on its block chain

The centralised part of the „CeDeFi“ does not seem to have really helped.

Binance announced on Wednesday that the stock exchange was able to recover $344,000 that Wine Swap had tried to steal with an exit scam. The project was on the Binance Smart Chain (NBB).

Wine Swap was an automated market maker platform, similar to Uniswap, and opened on 13 October. Within an hour of its launch, it had raised $345,000, which was immediately withdrawn from the platform by the makers of Wine Swap.

The money was then distributed in several directions to get them out of the Binance Smart Chain. The bulk was transferred to the Ethereum block chain. Some also went to Binance’s centralised bridge and two other exchanges. These were immediately frozen, said Binance.

The Binance team was able to identify the originators of Wine Swap through an on-chain analysis. The perpetrators then returned the money when they realised they had been caught.

The money is to be returned in its original currency. The suspected fraudsters exchanged part of it for other tokens.

This story is reminiscent of DeFi hacks, such as dForce or bZX in September. In all cases the perpetrators were caught by on-chain analysis or other external factors.

Binance claims that the stock exchange cannot control the money on the Binance Smart Chain, not even by freezing it. Only the money that goes to the stock exchange can be controlled by the company.

The incident illustrates how hackers and fraudsters can escape on the Binance Smart Chain. And they can do so by using some of the decentralised bridges.

Nevertheless, the smart chain ecosystem is a silo: Binance controls validation largely through its NBB share and the bridges are a useful funnel to make on-chain tracking easier.

Binance Smart Chain is a smart contract block chain launched by the stock exchange. It is fully compatible with the Ethereum Virtual Machine. The company intends to use it to enter the DeFi sector. Binance CEO Changpeng Zhao described it as „centralised decentralised finance“.