Binance’s BNB Token at Regulatory Crossroads: Risk of $220 Liquidation Sparks Controversy and Speculation

Jun. 14, 2023
Binance’s BNB Token at Regulatory Crossroads: Risk of $220 Liquidation Sparks Controversy and Speculation

Binance token BNB has been caught in the midst of regulatory crossroads with price risking $220 liquidation. Many believe if this happens, it will undoubtedly go down in history as one of the most significant liquidations in the DeFi world.

Market analysts are keeping a close eye on trends, and rumors are flying around that CEO Changpeng “CZ” Zhao and his trading firm are dumping Bitcoin [BTC] to artificially stabilize BNB.

Binance and CZ have been selling spot Bitcoin at an alarming rate, to defend the BNB $220 liquidation waterfall As spot Bitcoin is sold off, the token is purchased, which defends the $220 liquidation but also caps the upside potential of Bitcoin.

Citing a chart from one of these market observers, CZ tweeted in response that Binance had not sold either BTC or BNB and that the crypto exchange still possessed “a bag” of FTX Token FTT, the native token of the collapsed trading firm FTX, urging users not to fall for the FUD.

He also expressed surprise that these so-called analysts can easily deduce who sold based on just a price chart involving millions of traders.

Whatever it may be, the Binance-affiliated token is in a tough spot after dormant whales began to unburden its BNB bags. An ongoing crypto regulatory crackdown spotted one such whale cashing out part of its holdings after two years of inactivity.

According to data from Lookonchain, the anonymous huge HODler sold off 10,000 BNB coins for $230 each and made $2.3 million in profit. The wallet still had 15,000 BNB coins, or about $3.5 million.

The SEC’s classification of the token as a security and its lawsuits against Binance and rival Coinbase affected the aforementioned BNB token sale, leading to outflows and falling cryptocurrency prices.

The developing trends have ignited liquidity concerns and prompted inquiries about the exchange’s viability, as traders largely rely on strong liquidity to conduct trades.

BNB Emerges Top Gainer After 22% Drop Last Week

Despite losing nearly 10% in the last seven days, BNB, the fourth-largest cryptocurrency by market capitalization, is now leading the top 10 non-stable coin cryptos. The native token of the world’s biggest crypto exchange Binance climbed over 8% to $251.24, as per CoinMarketCap.

The gains could be a result of U.S. Republican Congressman Warren Davidson’s tweet, flouting a bill to restructure the SEC and remove its current chairman Gary Gensler.

Related Reading | To Close US Institutional Exchange Amid SEC’s Crypto Crackdown

Ammar Raza

Associate editor
Skilled in crafting compelling content, with a deep enthusiasm for blockchain technology. I offer precise and easily comprehensible perspectives on cryptocurrencies, decentralized finance, and the ever-evolving landscape. Count on me as a reliable resource to remain informed about the latest advancements in the world of crypto.