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Binance Coin (BNB) has been one of the best performing cryptocurrencies in recent years, increasing significantly in value since its launch in 2017. However, there has been a sharp decline in the value of the coin following the recent Securities and Exchange Commission (SEC) filing. Complaint against Binance.US and increased regulatory oversight by the US watchdog.
Currently, BNB is trading at $260, down 7% and 14% in the last 24 hours and the last seven days, respectively. The decline has been attributed to recent regulatory scrutiny as well as broader market trends.
BNB price drop spells trouble
BNB Bridge suffered an exploit that has put Binance Coin in a precarious position, with a potential liquidation of $200 million on the Venus Decentralized Autonomous Organization (DAO) if the price drops 14% to $220.
Venus DAO is the community-driven organization that governs Venus Protocol, a decentralized lending and borrowing platform built on the Binance Smart Chain. Venus Protocol allows users to borrow and lend cryptocurrencies and earn interest on their holdings.
According According to researcher DeFi Ignas, the exploit occurred on October 7, 2022, when an attacker mined 2 million BNB ($593 million) and deposited 900,000 BNB as collateral on Venus. He then borrowed other properties on Venus to launder as much money as possible. This is the largest possible liquidation in all of Decentralized Finance (DeFi) and cannot be put off.
Following the exploit, the BNB chain was halted in order to upgrade the network, and the Binance Bridge hack now ranks as the third largest hack overall. All three top hacks are cross-chain bridge exploits, exposing vulnerabilities in the DeFi ecosystem.
According to Ignas, the BNB chain itself will liquidate positions in order to prevent any mass liquidations. However, the good news is that Venus DAO has voted to whitelist BNB Chain as the sole liquidator of BNB exploiter addresses. This move will help prevent any further disruption in the market and provide some stability to the market.
Binance.US Netflow Plummets
Blockchain and data research firm Nansen has informed of Net outflows from major cryptocurrency exchanges Binance and Coinbase decreased in the 24 hours following the news of the SEC lawsuit against Coinbase. Outflows came back to $491.9M and $105.3M, respectively.
This is in stark contrast to the situation 24 hours after the SEC sued Binance when Binance had a positive $78M net inflow. However, after the SEC sought a temporary restraining order to freeze Binance’s US assets, Binance’s net inflows turned negative, falling to -$123.6M.
The decrease in net outflows from Binance and Coinbase suggests that investors are becoming more cautious in light of the SEC’s legal actions against major cryptocurrency exchanges. The SEC’s lawsuit against Coinbase, in particular, has raised concerns about the regulatory scrutiny faced by the entire crypto industry.
Featured image from Unsplash, chart from TradingView.com
