Translated Version of Everything If you're not familiar with | Libre Blockchain

Translated Version of Everything

If you're not familiar with derivatives, options, etc., then some of this may seem like mumbo jumbo.

So to translate - Binance offers traders on their platform the ability to buy an option.

'Options' are essentially contracts that give someone permission to buy or sell an asset at a certain price at some point in the future. So if you buy a call option for Bitcoin for $5k that expires in a week, this means that you can exercise the option to purchase a Bitcoin for $5k from the seller of that contract before the cointract expires.

If Bitcoin were to go up in price - let's say, $10,000, then this would be great for you. Bitcoin would be $10k but now you can purchase it for $5k. That's awesome.

However, if Bitcoin goes down, could be bad for you.

In Binance's case, they were always the counterparty. So if you were buying one of these contracts from them, they were the ones saying, "Yes, we agree we'll sell this to you at this price".

The issue here is that Bitcoin spiked through the roof last Fall. So, as you can imagine, everybody was likely buying call options (how many bears were there back in January 2021?).

Since Binance guarantees unlimited upside, it doesn't matter how much money you gained on your call option, you were set to profit accordingly.

As you can imagine, this likely resulted in Binance getting killed on the other side of these contracts as Bitcoin spike from $10k to damn near $50k, almost without pause (if we exclude that lull in the price that occurred in late December).

Trades Settled in USDT

Here's the kicker. If all of these trades were settled in USDT at expiry (or whenever the option was exercised), then we must either assume:

A) Binance just ate the losses outright (which could be in the billions) and paid out of pocket

or

B) More USDT got printed to cover all of these trades where Binance had to have been getting their asses kicked.

You cannot possibly tell me that someone was naked shorting Bitcoin from October 2020 - January 2021 and not getting murdered on the markets. That makes no sense.

But based on what Binance has on their own website, we know that this had to be the case (since they guaranteed unlimited upside for traders no matter what & also announced that they are the sole-issuers of these contracts)