![]() ![]() But speculation about such a disastrous scenario is making some in the industry uneasy about Binance’s large holdings of assets like BNB and Tether, which offer little transparency. That in turn could lead to Tether-whose reserve structure has always been murky-failing to maintain its $1 peg, which would set off a wide conflagration across the crypto markets.Ī spokesperson for Binance told Fortune that the exchange has never used BNB as collateral. The value of BNB could crater if the market were to grow uneasy about Binance’s health, which would leave Binance unable to pay back loans, leading it to sell its holdings of the wildcat stablecoin Tether. Binance denies this practice, but if it were true, it could leave the company vulnerable the same way FTX’s FTT token did. That worst-case scenario might sound familiar: It speculates that Binance could be using a token called BNB, which is native to Binance’s own blockchain, as collateral for loans. This is part of what made it feel urgent to map out the worst-case scenarios involving Binance, the executive at the rival company said. The alarm over Binance increased amid reports that the company was failing to process withdrawals of USDC, one of the more widely used stablecoins pegged to the U.S. An executive at a Binance rival, who requested anonymity because he was not authorized to speak publicly, told Fortune that his company’s internal estimates suggest that total outflows may have been as high as $6 billion to $8 billion, including cash-outs of Bitcoin and other currencies like Tron. The full extent of the outflows may have been higher than reported, since the Nansen data includes withdrawals of Ethereum and stablecoins but not Bitcoin. The spur for the withdrawals was likely a report published Monday that claimed factions in the Justice Department are pushing aggressively to file criminal charges related to sanctions violations and money laundering against Binance and its CEO. It began when the analytics firm Nansen published data to show customers cashed out around $3.6 billion worth of assets over seven days from Binance, including almost $2 billion in a single day. While this week’s news cycle has been consumed by Bankman-Fried, and crypto-related testimony in Washington, D.C., a fresh drama about Binance played out quietly in the background. Nonetheless, the company and its CEO are under scrutiny like never before-and the next few months will determine whether Binance has a long-term future. In a memo to staff, he wrote that the industry is undergoing an “historic moment” and that the next few months would be “bumpy,” but assured them that Binance “will survive any crypto winter.” ![]() Zhao acknowledged this week that the company and crypto more broadly are enduring a tough stretch.
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