CZ Responds to Allegations of Binance Dumping Bitcoin to Defend BNB

0

[ad_1]

Binance CEO Changpeng Zhao (CZ) credited a little-known X (formerly Twitter) user on Wednesday for dispelling rumors of internal chaos at Binance, which suggested that the exchange was desperately selling its Bitcoin stash to protect the price of its native token, BNB.

The rumors pertained to a vulnerable BNB collateralized DeFi loan on Venus protocol that approached liquidation this week.

Is BNB in Trouble?

As explained by @zkHopium, the loan in question began with BNB Chain’s 2 million hack in October 2022, during which a hacker minted 2 million BNB (then worth $600 million) from thin air.

The hacker later deposited 900,000 stolen BNB into Venus, borrowing $150 million worth of USDT and USDC stablecoins. This theoretically puts those funds at risk of liquidation should BNB’s price dramatically fall, creating the potential for a massive BNB market crash.

In response, Venus whitelisted BNB Chain as the sole eligible liquidator for the loan, which has since paid off 90 million USDT on the loan.

Nevertheless, liquidation remains a threat. According to zkHopium’s calculations, the loan’s liquidation threshold is $196, at which point liquidators can typically liquidate 50% of collateral. BNB’s current price is $217.

Should this occur, however, the analyst doubts that a massive pile of BNB will actually flood the market.

“As BNB Chain is unlikely to market dump seized collateral (some rumored to say they may even burn the BNB), there will not be $200m+ BNB flooding the market in a liquidation scenario,” the analyst wrote.

Is Binance Involved?

Hopium also argued that Binance likely did not fund BNB Chain’s most recent loan repayment, given that the exchange and blockchain network are separate entities. Less likely still is that Binance would sell its BTC holdings to provide such funding, given that the exchange claims to produce $12 million in revenue per year.

In response, CZ pointed out that hypothetically selling $30 million in BTC to fund the loan would not be enough to have impacted Bitcoin’s price this month. “That’s less than 0.001% of BTC daily trading volume,” he said.

He also suggested that the “influencers” promoting such theories may only be doing so for engagement, in order to make money.

In July, CZ denied rumors that a wave of executive departures from Binance was related to any internal panic regarding run-ins with the law.

SPECIAL OFFER (Sponsored)
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.

[ad_2]

Source link

You might also like
Leave A Reply

Your email address will not be published.