Binance CEO CZ Responds to Bitcoin Dumping Accusations
In response to the growing speculation within the cryptocurrency community, Changpeng Zhao (CZ), the CEO of Binance, has addressed allegations surrounding a significant sell-off of Bitcoin (BTC) by Binance. These allegations have been associated with a 7% drop in the BTC price.
CZ took to Twitter to provide his response, sharing a thread authored by a user named ZkHopium. The thread offers an in-depth analysis that debunks the claims and underscores the foundational aspects of the situation.
CZ Debunks Allegations Of Bitcoin Dumping
The analysis by ZkHopium sheds light on the events related to the liquidation of Binance Coin (BNB) on the Venus Protocol. The incident occurred on October 6th, 2022, on the Binance Smart Chain (BSC), resulting in the creation of 2 million BNB.
Out of this total, 900,000 BNB were deposited on the Venus Protocol to borrow approximately $150 million worth of USDT and USDC. As a response, the BNB chain executed a burn of over 2 million BNB, which was valued at about $550 million at that time. This action effectively removed these tokens from circulation.
To facilitate the liquidation process, the Venus Protocol initiated a governance proposal designating the BNB Chain as the exclusive liquidator for the loan. Subsequently, the liquidator’s wallet received funding: 30 million BUSD in December 2022, an additional 30 million USDT in June 2023, and another 30 million USDT on August 21, 2023.
The liquidation mechanism of the Venus Protocol involves a collateral factor or liquidation threshold. Once triggered, liquidators can gradually sell up to 50% of the collateral, while obtaining an extra 10% worth of the liquidated collateral as fees.
ZkHopium’s analysis highlights key factors that set this case apart. Firstly, the involvement of only one liquidator reduces the incentive for market dumping. Secondly, the liquidation process is carried out manually, without the intervention of bots engaging in front-running.
Lastly, considering the substantial size of the loan, the liquidation tranches are expected to be much lower than the 50% threshold.
Responding to the allegations, CZ expressed his gratitude for ZkHopium’s comprehensive research and stressed the “insignificant” impact of a $30 million liquidation on Bitcoin’s price. He clarified that Binance does not issue BTC, and rewards are primarily distributed in BNB. CZ emphasized that the concerns about a significant BTC price impact are unwarranted, given that $30 million accounts for less than 0.001% of BTC’s daily trading volume.
As of the current moment, BNB is being traded at $217, as illustrated in the chart above. However, it has witnessed a slight decrease of 0.2% over the last 24 hours.
Bitcoin Price Maintains Around $26,000 Despite Minor Dip
The leading cryptocurrency by market capitalization, Bitcoin, is currently valued at $26,000, demonstrating relative stability. It experienced a decline of 2.4% after briefly touching the $26,700 mark.
Despite the existing low levels of volatility, Keith Alan, the co-founder of research and analysis firm Material Indicators, provided insights on the prevailing market situation:
- Economic reports released today have not exerted significant influence on volatility. Nevertheless, they will contribute to the narrative influenced by Jerome Powell’s upcoming speech at Jackson Hole on Friday.
As the anticipation builds for the remarks of Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium, the Bitcoin market is displaying indications of heightened activity.
Keith Alan suggests that while the economic reports may not have an immediate impact on volatility, they will shape Powell’s narrative during his speech. This anticipation is likely to result in increased volatility as the BTC market approaches the weekend. Traders and investors are preparing for potential market fluctuations as Powell’s speech unfolds, with the expectation that his statements could significantly influence the cryptocurrency market.
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