Binance Native Token Sent Plummeting as Investors’ Concerns Over FTX Bankruptcy Repercussions Mount
BNB, Binance’s native token, was sent into a freefall this week, losing about 15% of its value as investors grow concerned over the affect of FTX’s bankruptcy proceedings on the crypto exchange.
The BNB token fell more than 6% over the last 24 hours, as the crypto community questions Binance’s ability to withstand a potential clawback demand of $2.1 billion linked to bankruptcy proceedings of Sam Bankman-Fried’s FTX. The token, which was first created in 2017, boasts a market cap of around $39 billion, making it the fifth biggest cryptocurrency in the world. However, Binance has run into issues as of recent, thanks to the implosion of FTX.
Binance was one of the first outside exchanges to invest in FTX; however, CEO Changpeng Zhao exited the position in 2021, receiving a payout equal to approximately $2.1 billion. The trouble began to mount when Zhao announced he’s liquidating Binance’s position in FTX’s native token, FTT, citing solvency concerns regarding both FTX and Bankman-Fried’s linked hedge fund, Alameda Research. FTX wasn’t able to handle the sudden surge in withdrawals, to which Binance offered to purchase the exchange via a non-binding agreement.
But, the following day, Zhao backed out of his offer, sending FTX barreling towards insolvency and, ultimately, a Chapter 11 bankruptcy filing. SBF has since been arrested on various fraud charges, and is being held in police custody in the Bahamas. Now, However, investors have turned their attention to Binance, and concerns over whether or not the exchange can pass the stress test of a $2.1 billion demand as trustees look to recoup any fraudulent conveyances made by FTX.
“We are financially OK,” Zhao said in an appearance on CNBC’s ‘Squawk Box” on Thursday. “We passed this extreme stress test because we run a very simple business model— hold assets in custody and generate revenue from transaction fees,” explained a Binance spokesperson later.
Information for this briefing was found via CNBC and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
