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Binance is allegedly selling Bitcoin to increase the price of its native cryptocurrency BNB, which has fallen more than 30% since the start of the year. Binance faces an uphill battle to maintain its dominant market position in the face of increasing regulatory scrutiny and allegations of Bitcoin dumping.
BNB in Free Fall
Binance Coin (BNB) has fallen below its 200-week Moving Average for the first time, fueling concerns about the potential for significant losses among altcoins, particularly those relying on the BEP20 and BEP2 token systems. The decline comes amid a broader market correction, with Bitcoins value fell below $26.1k this week, creating anxiety and uncertainty in the cryptocurrency world.
Source: CoinMarketCap
The situation was exacerbated by reports about Binance allegedly dumping customers’ Bitcoins in favor of its BNB token. Crypto influencer WhaleChart first mentioned these allegations on social media platform X, with some Binance users later complaining that they were unable to withdraw their BTC due to the temporary withdrawal suspension. Although there is no official confirmation of this report yet, the crypto community is still divided on this matter.
SOLUTION:
Binance is allegedly selling Bitcoin to support the price of their own BNB token
— Whale (@WhaleChart) August 22, 2023
Regulatory Issues
The exchange is constantly under regulatory scrutiny, especially 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 was charged Binance and its CEOChangpeng Zhao (CZ), in violation of securities laws.
Due to increased regulatory pressure, Binance has also lost important partnerships, as it did with London-based credit card processing firm Checkout.com. Such setbacks have impacted Binance’s ability to provide fiat-to-crypto on-lean services, further impacting its market position.
Bitcoin Strategy
Binance has turned to substantial holdings of Bitcoin to counter the increasing selling pressure. Recent reports suggest that Binance was forced to sell Bitcoin over the past few days in order to halt any further decline in the BNB price.
Binance’s Bitcoin strategy comes amid concerns about its alleged involvement in helping Russian users move money abroad in violation of international sanctions. By soaring liquidation from a $130 million BNB-guaranteed crypto loan on the Venus decentralized finance protocol, Binance had to tread carefully to avoid flowing liquidations and unnecessary market breakdowns.
Binance’s current challenges underscore the complexity of the cryptocurrency market and highlight the need for responsible practices and regulatory compliance. Exchanges must address these issues in order to regain investor confidence and ensure the stability of their native tokens and the wider cryptocurrency ecosystem.
The content presented may include the author’s personal opinion and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.
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