- New suspects that Binance may be using their exchange listing application process as a way to steal information from unsuspecting competitors eager to be listed on their exchange.
- Blocknet revealed that Binance asked highly technical questions about their code and development process, possibly as a way to get information to develop their newly released DEX.
- Evidence shows that NEO co-founder Erick Zhang was involved in the questioning process, perhaps looking to acquire data to further the development of NeoFS’s storage solution.
- However, whether the suspects are correct, Blocknet had known that Binance were planning their DEX before contacting the exchange for the first time.
Binance, one of the biggest and most trusted exchanges in the crypto space, may have a dark side to how they’ve acquired information necessary to build their highly anticipated decentralized exchange (DEX).
Binance officially launched their DEX just yesterday. However, new evidence has come out that portrays Binance as misusing their power as a highly popular exchange to deceive eager crypto projects into sharing sensitive information about themselves to get listed. These projects would then be ignored, and their applications are forgotten once Binance had received all the information they wanted from them.
Binance Seeks for Blocknet Technical DEX Info
According to Tyler Swope from the Chico Crypto Youtube Channel, this is precisely what happened to Blocknet, a second layer blockchain interoperability protocol. The project has its DEX, named BlockDX.
Like others, it was also one of the projects that many people in the crypto space have been hoping would be listed on Binance.
Well, Blocknet did apply to be listed on Binance’s Exchange on August 2018, submitting the standard online application. The project followed the usual procedure, which includes answering a series of simple form of questions about the team, nature of the project, target industry, etc.
These are standard non-intrusive questions that Binance asks all projects applying to be listed. However, when it came to Blocknet, apparently these standard questions were not enough to evaluate their application; Binance’s head of business development, Ashley Ouyang, had then sent an email to Blocknet with an additional application form that included more questions.
Blocknet filled out the form and responded to Ashley the very next day. Then over a month went by with no response from Binance.
The radio silence from Binance seemed suspicious to Blocknet, and they began reviewing the questions they had answered in the second application. Only then they realized how much more intrusive the questions were, which made them even more suspicious.
Some of the many questions in the second application include information on:
- Blocknet’s interoperability infrastructure and whether they could find the code in their GitHub.
- Why Blocknet chose to build their DEX
- How Blocknet solves the domain name system problem in the blockchain
- If Binance could receive access to BlockNet’s private repository to view their latest developments
As we already mentioned, when Blocknet answered all of these questions and submitted the application, Binance cut off all communication with them and would not reply anymore.
Given that Binance announced that they would be launching their DEX on March 2018 (5 months before Blocknet’s application), some questions are raising whether or not Binance was trying to gather as much information about their competitors to help fastrack Binance DEX development process.
NEO plays a role in the deception to gain info about a storage solution
Further proof of this claim can be found in the identities of the people involved in the communication between Binance and Blocknet.
On the second application, Blocknet revealed that quite a few Binance developers (such as Nigel Yee and ‘CC’) had a hand in composing the more technical questions that Blocknet answered. But most surprising of all, Blocknet suspect that Erick Zhang, the CTO of NEO, was also involved. Zhang assisted in creating NEO’s dBFT (delegated byzantine fault tolerance) consensus.
As can be seen on Blocknet’s video, Zhang is the one asking questions about their Github repo, infrastructure, how they solved their DNS problem and if they could elaborate on their blockchain based storage solution.
The storage solution question is critical since NEO has been looking to develop a storage solution for NeoFS, while Binance has been looking for the same solution for their DEX. Erick Zhang is also an angel investor in Binance, which explains his willingness to collaborate with Binance in providing information from DEX platforms like Blocknet to benefit his project NEO and Binance.
Shocking News or Innocent Behaviour?
Ultimately, this is shocking news because Binance has built up such a strong reputation for being highly trustworthy and ethical in their business dealings so far. If these accusations are true, then it’s a red mark for future projects looking to get listed on Binance and sharing confidential data.
If during the application process it becomes evident that they have even a minor competitive edge over the exchange, they could be forced to give Binance more information or face being rejected. In the case of Blocknet, also when they did comply and provide all the information they were asked for, they were still dismissed.
Although we can say that Blocknet was naive in assuming that the sensitive information they revealed would only be used to evaluate their listing application, it’s clear that even they were caught blindsided by the shady practices of crypto’s most “trusted” exchange, Binance.
Binance: DEX Plan Were Publicly Announced
However, whether or Blocknet’s suspects are right, the facts are that it’s well-known that Zhang is an adviser for Binance, so no doubt he will assist the exchange where he can. Also, Binance announced publicly that they are building a DEX even before Blocknet approached them for the first time. If they were afraid of competition, Blocknet did not have to contact Binance for any reason, and certainly not to disclose any confidential technical information.