Binance is in the grip of an unprecedented crisis: the threat of liquidation looms. The CEO, CZ, is scrambling to back up his loan at risk. The crypto community is watching, discerning similarities to the FTX case. Stay alert, follow developments in real time.
The fall hits the crypto market: Binance falls into chaos!
The night of August 17 left deep scars on the crypto market, with repercussions particularly felt at Binance, the world’s leading crypto exchange. CZ now finds itself in a frantic race to save the price of BNB (Binance Coin) and prevent a potentially catastrophic scenario. How did we get here ?
For Binance, this situation turned out to be incredibly complex. The price of BNB thus slipped below $220, causing the liquidation of several positions within Venus Protocol. Among them, those of the hacker of the Binance Smart Chain.
The BSChain hack scandal resurfaces: A reversal of the situation!
In October 2022, an “exploiter” managed to illegally seize 2 million BNB tokens thanks to a flaw in BNBBridge. Of this sum, 900,000 BNB serve as collateral on Venus to lend more than $150 million in stablecoins, spread across various chains.
However, the moment the value of BNB drops below $220, blockchain data attests that three positions attached to this malicious wallet are automatically liquidated. At the time of writing, BNB is trading at $208 and 300,000 of the 900,000 BNB have been liquidated, now in the custody of Binance.
The total liquidation of these 900,000 fake tokens would represent a victory for Binance, ending this affair which has been going on since October 2022.
However, Binance also has positions in Venus that should not be liquidated. The question arises: will she let her positions be liquidated to recover and burn the fake BNB? Which decision would be optimal for the platform and its financial health?
Binance injects again: How far will it go to save its position?
Binance would have subscribed to a secured loan in BNB, with a close-out clause at the critical bar of $212. Of the sources suggest that CZ was selling his BTC from wallet bc1qm34lsc65zpw79lxes69zkqmk6ee3ewf0j77s3h for TUSDwhile buying BNB to prevent the crypto from dropping below $210.
On June 12, 2023, a first liquidation was avoided thanks to an injection of $30 million USDT by Binance, thus adjusting the threshold to $212. More recently, on August 17, another test was overcome, bringing the threshold down to $210.80. Yesterday afternoon, according to crypto analyst MartyParty, Binance would have injected another $30 million USDT to consolidate its position.
Now the liquidation is pushed back to $190. How long will Binance keep this game going? How will CZ cope when the threat becomes difficult to handle?
Crypto experts are questioning themselves and do not hesitate to compare this strategy to that of Sam Bankman-Fried, the consequences of which have been painful for the crypto universe.
The SEC alerted: On the way to the audit!
Yesterday, August 21, crypto attorney John Reed Stark issued an appeal on Twitter to the Securities and Exchange Commission (SEC) as well as the Financial Industry Regulatory Authority (FINRA), urging them to hurry auditors and inspectors to investigate Binance. His comments follow Binance’s suspension of EU withdrawals.
Indeed, on August 20, 2023, Binance customer service on Twitter informed a user of the temporary suspension of Euro withdrawals and deposits through the SEPA system. This decision results from the unavailability of the euro provider for euro transactions, thus affecting customer euro withdrawals. The Binance case is far from over. Stay tuned for the latest updates.
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