On November 4, Binance said that it had successfully recovered around $344,000 in funds from the exit scam of Wine Swap. Wine Swap was a project developed and operated on the Binance Smart Chain (BNB). It operated majorly as an automated market maker platform resembling Uniswap that launched on October 13.
Within an hour of that launch, the project had amassed $345,000 in funds. The creators quickly pulled the funds from the platform. These funds were then spread across many directions in an attempt to get them out of the Binance Smart Chain. Most of them were swapped to the Ethereum blockchain although a part of it was also channeled to Binance’s centralized bridge and two other exchanges.
Binance moved quickly to freeze these funds. The Binance team later managed to identify the Wine Swap creators via on-chain analysis. Perpetrators then returned that money after discovering that their plan had been thwarted.
That money is expected to get returned in its original denominations after the suspected thieves changed some of it into other tokens. This story is not quite different from DeFi hacks like dForce or bZX’s September hack. In all these cases, the perpetrators were caught through keen on-chain analyses or other external factors.
Binance Insists It Is Decentralized
Binance insists that it cannot control the funds on Binance Smart Chain, not even by freezing them. Just those that make it to the exchange are under the company’s control. This incident indicates how it is quite possible for scammers and hackers on Binance Smart Chain to escape capture by using a variety of decentralized bridging options.
Nevertheless, the Smart Chain network remains siloed: it is clear that Binance mainly controls validation through its BNB stake, and the bridges appear to be creating a useful chokepoint to enhance on-chain tracking.
Binance Smart Chain is designed as a smart contract-enabled blockchain unveiled by the exchange. It is wholly compatible with the Ethereum Virtual Machine and it comes as a part of the firm’s take on decentralized finance (DeFi) known as “centralized decentralized finance (CeDeFi)” as named by Binance CEO Changpeng Zhao.