Kadan Stadelmann, the chief technology officer of decentralized exchange AtomicDEX, believes it’s only a matter of time before Binance implodes.
Atomic bomb
AtomicDEX is a decentralized exchange built on top of the Komodo (KMD) multi-chain platform. It claims to be “the industry’s most advanced peer-to-peer mobile-first atomic swap protocol”.
Talking to Cointelegraph, Stadelmann explained why users should not trust big centralized exchanges like Binance:
“I absolutely do think [Binance] is just like a ticking time bomb. We don’t know what is happening with these funds, are they even in a secure and safe environment? But more importantly, there is no transparency as to what happens with these funds in a business sense. Are these funds used in other business activities? Do we know if there may be an investment firm behind this exchange using these funds and so on?”
Centralized exchanges own your Bitcoins
Furthermore, he believes that because of the regulatory vacuum, the users may not even have the right to know about how Binance handles their assets:
“At the end of the day, I think we wouldn’t even have the right to, to intervene or to change something. If these funds were used for something other than storing them for you. Because there are no real contracts around. There is no insurance with most cryptocurrency exchanges. Very few of them have regulation or the solvency analysis.”
Stadelmann observed that, technically, centralized exchanges own their users’ Bitcoin (BTC):
“But we’re seeing that some of the biggest especially alternate cryptocurrency trading markets like Binance have a huge power, huge control. And they are the custodians. They control these funds. And speaking technically, they own these Bitcoins.
Discussing Binance’s involvement in the Steemit controversy, Stadelmann likened it to “Cosa Nostra” — an organized crime syndicate, also known as the Sicilian Mafia, with roots in southern Italy.
Merging of DEXs and centralized exchanges
Acknowledging the fact that the vast majority of trade happens on centralized exchanges, he expressed the hope that as DEX technology improves, this will change:
“We actually added abilities to AtomicDEX so that you can use it with a centralized exchange as well. I believe we will see a real coexistence between the decentralized exchanges, the centralized exchanges, and we’ll see a lot of different DEX systems. We’ll be likely using the order books and the volumes, the liquidity off the centralized exchange environment and ecosystem.”
Recently there has been a trend towards users moving their assets away from centralized exchanges. Even so, the volume on decentralized exchanges remains meager for now. While it seems unlikely that the DEXs will become dominant players anytime soon, tapping into centralized exchange order books could be a good short-term solution to boost liquidity.
Cointelegraph has reached out to Binance for comment, but has not received a response in time for publication.
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