A Binance customer accused the giant exchange of stealing a picture-based Ordinal

A Binance customer accused the giant exchange of stealing a picture-based Ordinal, a bitcoin asset similar to a Non-Fungible Token (NFT).

A Binance customer is accusing the giant crypto exchange of stealing a picture-based Ordinal, a bitcoin asset similar to a Non-Fungible Token (NFT).

The customer said he mistakenly sent the asset to his bitcoin (BTC) deposit address, despite Binance’s warnings to only deposit common BTC.

After realizing his mistake, he contacted Binance support for help. But Binance’s customer service said they could not help him. At that point, he assumed the asset was lost forever.

However, he later found his Ordinal listed for sale on Magic Eden.

Read More: Luke Dashjr calls Ordinals a spam ‘bug’ that should be ‘fixed’

At first, the customer was furious. He alleged in a X post that a Binance employee secretly recovered the Ordinal – in spite of Binance’s official claim that it was unrecoverable – and listed it for sale.

However, once the user learned about a practice called sats panning, he deleted his original post with tacit embarrassment.

The original claim went viral on social media, with many critics happy to dogpile onto Binance, the fabulously profitable conglomerate. Sympathizers tagged in founder Changpeng Zhao (CZ) and decried “theft.” Others called Binance a “criminal organization,” lamenting, “There is probably nothing you can do unfortunately.”

Panning for sats

Soon enough, more experienced BTC users jumped into the chat. They explained what actually happened.

As it turns out, Binance did not steal the Ordinal NFT. Instead, a savvy collector of rare BTC had panned Binance and won the lottery.

Panning for satoshis or ‘sats,’ the smallest denomination of bitcoin equal to 1/100 millionth of 1 BTC, is the digital version of the centuries-old practice of gold panning.

Just as gold panners sift through waterbeds and piles of dirt in the hopes of finding a nugget, sats panners sift through piles of bitcoin in the hopes of finding a rare sat.

They usually pan at crypto exchanges, which process a massive volume of coins on a daily basis. A large portion of these coins are internal transfers between the exchange's hot wallet and its users’ wallets.

These "hot" coins are part of a larger, commingled pool, which is a single private key that controls the coins used for deposits and withdrawals.

At the time of writing, Binance is the world’s largest cryptocurrency exchange. Its workers view satoshis as fungible. Its employees do not spend time scouring through its customers’ deposits for rare sats.

From a giant commingled pile of bitcoin, Binance workers simply disburse sats for withdrawal requests, without regard for which of those bitcoin are ‘rare.’ For the average sats panner, Binance’s indiscretion is a digital gold mine.

Collecting rare sats is all the rage. Here's how to get started 🧵👇pic.twitter.com/lm2l2dza5g— Anish A. Agnohotri (@AgnohotriAnish) August 10, 2023

Anyone who can successfully deposit and withdraw from these commingled pools of bitcoins can hope they win the withdrawal lottery.

With the downside risk being primarily the transactions fees and the unlikely yet alluring possibility of winning the lottery, the practice is a niche pastime in crypto. Sometimes, panners will check their withdrawal and discover a windfall. They just might list their lucky win on Magic Eden.