The turmoil continues for Binance, in the wake of attacks from the US regulator. The leading cryptocurrency exchange is accused of selling massive amounts of Bitcoin (BTC) to maintain the price of BNB, its native token. The latter is particularly threatened by a potential liquidation of $210 million around the price of $220.
Sell BTC to save BNB?
It all started with a simple post by an internet user on Twitter. He pointed to strange price movements for the BTC/USDT and BNB/USDT pairs on Binance. He suggested that the exchange might be intentionally selling BTC in order to buy BNB on a massive scale and artificially maintain the price.
Figure 1: Comparison of BTC/USDT and BNB/USDT on different indicators and over the period 25 May – 13 June
The figure above was put forward by the web user to prove his theory. On the left is the BTC/USDT pair and on the right the BNB/USDT pair. It doesn’t take long to see the impact of recent news on the Binance BNB price (see the graph at top right).
However, the most interesting graphs are the two in the middle, representing the CVD indicator. This is particularly useful for tracking trades in contracts backed by the asset in question, here only in spot. As you can see from the figure above, the CVD for Bitcoin has been falling steadily since the end of May, symbolising a steady sale of BTC on the exchange.
Conversely, for the Binance token, this indicator has only increased over the same period, symbolising an almost discontinuous purchase of BNB on the exchange. The problem is that these behaviours reflect neither price movements on the assets nor the state of mind of investors, who seem to be abandoning their positions in risky altcoins in favour of Bitcoin.
Faced with these rumours, Changpeng Zhao, CEO of Binance, was quick to respond. He quoted the user’s tweet, using some of his own language, notably the number 4, which has become a symbolic response to FUD:
” 4. Binance has not sold any BTC or BNB. We even still have an FTT bag.
It’s amazing that they can know exactly who sold based on a simple price chart involving millions of traders. FUD. ♂️ “
A $200 million threat to the NBB
One of the reasons why the scenario described above is possible is the current threat to the BNB share price. Binance’s token faces a $200 million liquidation wall should its price fall below $218.
Figure 2: Potential liquidation in DeFi threatens BNB price
The situation is simple: if the NBB share price continues to fall, around $210 million would be liquidated on Venus, a decentralised finance protocol (DeFi) specialising in lending. The only way out would be for the holder of this address to add collateral to its position. However, this is impossible because the address has been frozen by Binance in a case dating back to autumn 2022.
The position belongs to a hacker who stole more than BNB 2 million (around $500 million). To do this, he borrowed $147.5 million in stablecoins with collateral of BNB 935,000. It is precisely this position that threatens the entire BNB Chain ecosystem.
For the record, there is a way out, which once again calls into question the decentralisation of the BNB Chain. There is a whitelisted address belonging to the NBB Chain’s central team that is authorised to carry out the liquidation in collaboration with “Binance and other players” in order to prevent it from occurring with friction.
