Binance is allegedly selling Bitcoin to boost the price of its native cryptocurrency BNB, which has fallen by more than 30% since the start of the year. Binance faces an uphill struggle to preserve its dominating market position in the face of rising regulatory scrutiny and charges of Bitcoin dumping.
BNB in Free Fall
Binance Coin (BNB) has fallen below its 200-week Moving Average for the first time, sparking concerns about potential significant losses among altcoins, particularly those relying on the BEP20 and BEP2 token systems. The drop comes amid a broader market correction, with Bitcoin’s value dipping below $26.1k this week, creating anxiety and uncertainty in the cryptocurrency world.
The situation has been exacerbated by reports of Binance allegedly dumping customers’ Bitcoin to support its BNB token. Crypto influencer WhaleChart first mentioned these allegations on social media platform X, with several Binance users later complaining that they could not withdraw their BTC due to a temporary suspension of withdrawals. While there has been no official confirmation of these reports, the crypto community remains divided on the issue.
Binance is allegedly selling Bitcoin to support the price of their own token BNB
— Whale (@WhaleChart) August 22, 2023
The exchange has been under constant regulatory scrutiny, particularly since the collapse of FTX and Alameda Research last year. In March, Binance faced a lawsuit from the United States Commodity Futures Trading Commission (CFTC), alleging illegal operations and a lack of proper compliance measures. The situation worsened when the US SEC charged Binance and its CEO, Changpeng Zhao (CZ), with violating securities laws.
Due to mounting regulatory pressure, Binance has also lost crucial partnerships, like the one with London-based credit card processing company Checkout.com. Such setbacks have affected Binance’s ability to provide fiat-to-crypto on-ramping services, further impacting its market standing.
Binance has turned to its substantial Bitcoin holdings to counter the growing sell pressures. Recent reports suggest that Binance has resorted to selling Bitcoin over the past few days to halt further BNB price declines.
Binance’s Bitcoin strategy comes amid concerns about its alleged involvement in helping Russian users move money abroad in violation of international sanctions. With a looming liquidation of a crypto loan secured by $130 million worth of BNB on decentralized finance protocol Venus, Binance must tread carefully to avoid cascading liquidations and unnecessary market damage.
Binance’s current challenges underscore the complexities of the cryptocurrency market and highlight the need for responsible practices and regulatory compliance. The exchange must address these concerns to regain investor confidence and ensure the stability of both its native token and the broader cryptocurrency ecosystem.
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