Is Binance Dumping Bitcoin? Assessing the FUD with Data
Welcome to another Crypto Weekly Digest brought to you by VirtualBacon.
This week, we delve deep into the mounting challenges Binance, one of the world's leading cryptocurrency exchanges, has been grappling with recently. As regulatory pressures and operational hurdles intensify, there's a looming question: Could these adversities signal the downfall of this crypto giant? And if so, what ripples would this cause across the crypto ecosystem? Wrapping up, we'll provide a sharp overview of the current market sentiment, highlighting both the standout and underperforming coins of the week and a concise analysis of key cryptocurrencies and the forces shaping their trajectories.
Binance Under Fire: Uncertainty Looms Large for the Exchange
Is Binance offloading Bitcoin under the radar? And, more importantly, is there a risk of the platform folding before the anticipated bull run?
A potent black swan event has reared its head - centering on Binance. Though the possibility remains slim, increasing pressure from various places might push Binance to the brink this year. Let's dissect the issues at hand:
- Legal Tangles in the US: The SEC has pulled up Binance with allegations of illicit operations within the US. The core contention is that Binance covertly enabled high-stake US traders on their platform, using the Binance.US domain as a smokescreen to bypass regulatory constraints. The charge underscores that the US-specific platform was entirely controlled by Binance global and was used to get around regulations.
- Asset Mismanagement Accusations: Further intensifying the storm, the SEC accuses Binance of merging customer assets, subsequently channeling them to other entities helmed by CZ.
- A Barrage of Charges: Binance finds itself in a precarious position with a staggering 13 charges levied against it. The SEC paints a grim picture, depicting the exchange's operations as a convoluted maze rife with deception, glaring non-disclosures, internal conflicts, and intentional circumvention of legal mandates.
https://www.sec.gov/news/press-release/2023-101
CZ finds himself under direct legal scrutiny. The CFTC has taken legal action against him for offering derivative trading to US customers
https://www.coindesk.com/business/2023/03/27/binance-and-cz-sued-by-cftc-over-regulatory-violations/
The lawsuits Binance faces are of unparalleled significance. They transcend mere concerns about potential securities offered on Binance's platform. At their core, they challenge Binance's operational integrity, suggesting that even a move as drastic as delisting certain coins might not satisfy regulatory demands. The implications are clear: US authorities may be aiming to curtail Binance's US operations significantly or halt them altogether.
Observant users have already noted signs of these looming restrictions. Accessing Binance's primary platform from within the US has become increasingly challenging, and US-specific documentation no longer facilitates the KYC process.
This evolving scenario prompts us to ponder how much more Binance can tweak its operations to remain compliant with US regulatory standards. The overarching sentiment from the regulatory camp seems to hint at a strategy not just of containment, but possibly of a takedown.
it's evident that Binance isn't just grappling with the US regulators. We also see this pressure coming from other fronts.
Binance Operation Chokepoint 2.0
In recent times, Binance, appears to be in the center of a relentless web of challenges. Coined "Operation Chokepoint 2.0," there's growing chatter about a possible orchestrated campaign aimed at toppling this crypto behemoth. With a surge in regulatory actions, lawsuits, and scrutiny, one can't help but wonder: Is there a calculated strategy unfolding behind the scenes to stifle Binance's dominance?
https://coingape.com/binance-ceo-cz-nic-carter-on-repercussions-of-operation-choke-point-2-0/
With respect to Binance, I'm reading through the SEC complaint. It's over 130 pages, but seems like the next in a series of steps to implement chokepoint 2.0 in the United States. The end goal is a agenda based CBDC partnered with a handful of massive banks and end-to-end control…
— Charles Hoskinson (@IOHK_Charles) June 5, 2023
Following the mounting pressures, Binance is reportedly on the brink of closing down its US operations.
Adding to the strain, Binance has hit another roadblock with its US banking relationships. While the exchange boasts significant assets and user holdings, it faces challenges in processing US dollar withdrawal requests. Binance is being isolated by its US banking partners, leaving the exchange scrambling to find alternative routes, like leveraging USDC, to allow users to redeem their crypto in USD.
Lastly, as if these weren't hurdles enough, Binance's stablecoin, BUSD, has been ordered to halt its minting operations. This decision further underscores the tightening vise around Binance's various ventures and offerings.
The Potential Fallout: What If Binance Collapses?
The looming question on everyone's mind is the potential aftermath if Binance were to fall. The implications are colossal. Such a scenario could effectively cripple the entire crypto sector for several years.
Binance is by far the largest crypto exchange today. The exchange has 30 million customers, and is responsible for 30% of the crypto market’s trading volume.
https://cryptorank.io/exchanges?sort=volume_30d&direction=desc
https://www.coingecko.com/research/publications/centralized-crypto-exchanges-market-share
To understand the relative magnitude, let's take FTX as an example. Before its downfall, FTX was responsible for just 6% of the entire crypto market trading volume.
If Binance, with its vastly more extensive network, were to falter, the repercussions would be unimaginable. We'd likely witness cryptos plummeting into a sustained bear market, resetting the board and forcing holders to reconsider their positions.
The Resilience of Binance Amidst Turmoil
While there's a storm brewing around Binance, it's essential to differentiate between businesses with unsound practices and those facing external regulatory pressures. Binance undoubtedly falls into the latter category. Unlike FTX, which had dubious operations at its core, Binance's woes primarily arise from tightening regulatory scrutiny.
A testament to their integrity, Binance consistently displays their full proof of reserves, verifiable directly from the blockchain. These assets impressively cover more than 100% of user deposits.
https://www.binance.com/en/proof-of-reserves
In the aftermath of FTX's collapse in December 2022, apprehensive investors, questioning similarities with Binance, withdrew a whopping $1.9 billion within 24 hours.
The trend continued with the SEC's clampdown on Binance's BUSD minting in February 2023, which incited another massive withdrawal – a staggering 3.27 billion BUSD redeemed for USD in a spate that extended for eight months, accumulating to over 20 billion dollars redeemed. Through all this tumult, Binance's treasury remains unfazed.
https://blockworks.co/news/sec-triggers-bank-run-on-busd
Further hits came in quick succession: a $1.6 billion withdrawal in March post the CFTC lawsuit.
https://www.reuters.com/legal/investors-pull-16-billion-binance-after-cftc-lawsuit-2023-03-29/
Another $1.4 billion following the SEC lawsuit in June.
Despite the evident pattern, Binance has shown resilience, continuously meeting customer withdrawal requests and proving its operational legitimacy.
Where money flows are concerned, regulatory pressures paint a grim picture. It's not so much a lack of funds, but rather the curtailing of banking channels that's alarming.
The US regulators seem hell-bent on undermining Binance, aiming to erode user trust and siphon off its clientele. Their tactics appear to be effective.
After maintaining a dominant 40% market share in 2021-2022, which even surged to 62% post the FTX fiasco, Binance's grip has loosened in 2023. As of August, they've plummeted to a 30% market share.
The real concern isn't Binance's integrity but the external pressures that might eventually strain the giant.
Debunking the BNB Coin FUD
Rumors and uncertainty have recently plagued the BNB coin, with speculations suggesting that Binance might offload its Bitcoin reserves to address potential BNB coin liquidations. Such apprehensions stem from a previous security breach on the Binance chain, where a hacker stole 900,000 BNB coins, equivalent to $200 million. These coins later surfaced on the DeFi platform, Venus, and were used to borrow stablecoins, and this position had a liquidation price at around $220.
https://beincrypto.com/binance-coin-bnb-woes-liquidation-fears/
However, the situation has been entirely neutralized. The once looming massive BNB position ready for liquidation at the $220 mark no longer exists. Presently, the curve portrays a rejuvenated health, devoid of any significant debt. Meanwhile, the BNB coin has demonstrated its resilience by comfortably absorbing this sell pressure.
https://defillama.com/liquidations/bnb
In 2022, Binance reported an impressive revenue of $12 billion. Such a financial stature positions them well above any potential loss of $200 million tied to the BNB coin.
https://investingintheweb.com/brokers/binance-statistics/
So the rumor that Binance is dumping Bitcoin is totally false. Binance currently holds 620 thousand Bitcoin worth 16 billion dollars. But they have absolutely no need to dump these Bitcoin holdings. Bitcoin is the most sought after asset in Crypto. Especially in these turbulent times, with USD stablecoins and diverse altcoins facing US regulatory scrutiny, Binance's strategy would lean towards bolstering its Bitcoin reserves, not diminishing them.
Even in a scenario where stablecoins and US banking avenues are blocked, Binance has the ability to function, potentially reinstating Bitcoin as its primary trading pair – reminiscent of the early days of cryptocurrency.
In summary, Binance is indeed facing a ton of pressure from the US regulators. This is clearly hurting their business as they have already lost a significant chunk of the crypto market’s trading volume. Their revenue numbers in 2023 will most likely be lower than that of 2022s. Binance is also being cut off from the US banking system, and this could continue to cause users to withdraw money from the exchange. However, their inherent strength and adaptability should not be underestimated.
Best Performing Coins of The Week
Worst Performing Coins of The Week
Altcoin Events
Bone ShibaSwap ($BONE)
We begin our overview with BONE, a coin that has experienced a 19.6% gain over the past week.
BONE rocketed following the relaunch of the Shibarium mainnet. This surge is bolstered by the token's role as the official gas for Shibarium and its centrality to the transactions on the L2 blockchain. As Shiba Inu influencers flooded social media to announce the mainnet's revival, investor confidence in BONE soared, reflected in its swift price appreciation.
While BONE garners enthusiasm, concerns about the Shiba Inu ecosystem persist due to past technical issues. The upcoming ShibPaper aims to improve governance and platform management, but its impact in the vast crypto domain is uncertain. The Shibarium mainnet relaunch suggests a transformative era for decentralized finance, but the crypto community remains vigilant, hoping the revamped Shibarium fulfills its potential.
https://finance.yahoo.com/news/shibarium-shiba-inus-layer-2-032711043.html
Astar ($ASTR)
The second coin we will look at is ASTR. While its weekly gain stands at just 5.23%, notable news released during the week led to its strong performance over several days.
The real momentum push came from the Astar Network's imminent Astar 2.0 launch, expected to drop within three weeks. This update promises a holistic redesign, featuring innovative token economics strategies like a token burning mechanism, tiered incentives for developers, and a decreased inflation rate.
Adding fuel to the surge was Astar's partnership with tech giant Sony and its recent listing on Binance Japan. To add to this, the founder's announcement about Astar 2.0 Supernova's release at the Token2049 event heightened investor interest. With ASTR trading strongly, as with all crypto movements, potential investors should remember that market optimism might also stem from speculations, like Japan considering launching its CBDC on the Astar network.
https://www.binance.com/en-JP/feed/post/925405
Pepe ($PEPE)
The final coin we will look at is PEPE, a coin that experienced a huge 18.81% drop this week.
Pepe Coin, has recently been at the centre of controversy. Unexpected massive token transfers by the developer team to prominent exchanges fueled the speculations of a rug-pull. Etherscan records unveiled a transfer of 16 trillion Pepe Coin tokens, equivalent to $15.08 million, intensifying the investors' concerns.
In the aftermath of these unsettling movements, Pepe Coin’s value plummeted. The bearish tide continued, crashing its price over the span of a mere seven days.
However, amidst this backdrop of skepticism, a closer look at the Etherscan data highlighted a steady uptick in the number of Pepe Coin holders, now surpassing the 138,000 mark. While current events have cast a shadow over Pepe Coin's reputation, the sustained retail interest suggests a possible resurgence, as the more adventurous investors might see the depreciated $PEPE as a potential buy-in opportunity.
https://www.cryptotimes.io/pepe-token-crashes-20-amid-massive-16-million-transfer/
As we wrap up this week’s newsletter, Binance's struggles took center stage this week, emphasizing the unpredictable nature of the crypto sector. Meanwhile, certain coins soared while others dipped due to various market influences. As we head into the next week, remember that in crypto, just as with Binance's situation, there are both challenges and opportunities. Stay alert and informed.
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