CZ breaks its silence and dismisses Binance’s bitcoin dumping allegations to protect BNB

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In Answer Amid increasing speculation and accusations circulating in the crypto community, Binance CEO Changpeng Zhao (CZ) has addressed allegations of a significant Bitcoin (BTC) sell-off by Binance. These claims are related to a 7% drop in BTC price.

CZ responded on Twitter and published a thread by a user named ZkHopium, who provided a detailed analysis that debunked the claims and highlighted the fundamental basis of the situation.

CZ debunks allegations of bitcoin dumping

ZkHopium’s thread highlights events surrounding the Binance Coin (BNB) liquidation in the Venus protocol. It states that the exploit took place on October 6, 2022 on the Binance Smart Chain (BSC) and created 2 million BNB.

Of this amount, 900,000 BNB was deposited on the Venus protocol to lend about $150 million worth of USDT and USDC. In response, the BNB chain burned more than 2 million BNB, which was roughly $550 million at the time, effectively removing those tokens from circulation.

To facilitate the liquidation process, Venus Protocol passed a governance proposal naming BNB Chain as the sole liquidator of the loan. Subsequently, the BNB chain funded the Liquidator wallet with 30 million BUSD in December 2022, another 30 million USDT in June 2023 and another 30 million USDT on August 21, 2023.

The Venus Protocol liquidation mechanism includes a safety factor or liquidation threshold. Upon triggering, liquidators can incrementally liquidate up to 50% of the collateral and receive an additional 10% of the liquidated collateral as a fee.

ZkHopium’s analysis highlights several important factors that make this case unique. First, only a single insolvency practitioner has no incentive to engage in market dumping. Secondly, the liquidations are done manually with no bots involved at the forefront of the process.

In view of the considerable loan volume, it is to be expected that the liquidation tranches will be well below the 50 percent threshold.

Addressing the allegations, CZ expressed his appreciation for ZkHopium’s detailed investigations and stressed that the impact of a $30 million liquidation on the Bitcoin price was “insignificant.”

CZ stated that Binance does not issue BTC and that most rewards are in BNB. He emphasized that the alleged fear of a significant impact on BTC price is unfounded as $30 million represented less than 0.001% of BTC’s daily trading volume.

The bullish trend on the daily chart’s BNB recovered to higher levels after falling to the $204 line. Source: BNBSUDT on TradingView.com

At the time of writing, BNB is trading at $217 as shown in the chart above. However, over the past 24 hours, there has been a minor drop of 0.2%.

BTC is hovering around $26,000 amid a slight decline

The largest cryptocurrency on the market by market cap, Bitcoin, is currently valued at $26,000 but has remained relatively flat, posting a 2.4% decline after briefly touching $26,700.

Despite the current low volatility, Keith Alan, co-founder of research and analytics firm Material Indicators has done so written down The following about the market situation:

Economic reports released this morning had no significant impact on volatility. However, they will contribute to the narrative, which will be influenced by Jerome Powell’s upcoming Jackson Hole speech on Friday.

As anticipation mounts ahead of Federal Reserve Chair Jerome Powell’s comments at the Jackson Hole Symposium, the Bitcoin market is showing early signs of heightened activity.

Keith Alan points out that while economic reports don’t directly impact volatility, they will shape Powell’s narrative during his speech.

This anticipation will likely lead to increased volatility as the BTC market approaches the weekend. Traders and investors are bracing for possible market volatility as Powell speaks, anticipating that his statements could have a significant impact on the cryptocurrency market.

BTC returned to its formed range of $26,000 to $26,200 after briefly touching the $26,700 line. Source: BTCUSDT on TradingView.com

Selected image from iStock, chart from TradingView.com

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