Fraud Revealed: Is Binance Purchasing BTC To Defend BNB? – Coinpedia Fintech News
Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
Binance is under investigation by the DOJ for potential fraud.
The company is accused of manipulating Bitcoin prices and using its reserves to prop up its own token, BNB.
The allegations have raised questions about the legitimacy of Binance’s business model.
All eyes are on the popular crypto-exchange giant Binance, its enigmatic CEO Changpeng Zhao (CZ), and the platform’s native token Binance Coin (BNB). Allegations of purchasing Bitcoin (BTC) to support BNB and potential fraud investigations by the Department of Justice (DOJ) have put the company in the crosshairs of speculators and investigators alike.
Binance Is Purchasing BTC To Defend BNB – DOJ FRAUD BINANCE 📈📉💹📊 ⟶ via https://t.co/lsTr6NEvET https://t.co/GsQ6YTd1xq pic.twitter.com/968QIAvrwD
In the centre of the storm is an intriguing pattern involving Bitcoin and Binance Coin. An analysis of market data indicates that whenever BNB starts to look weak, there’s a surge of altcoin selling, which gets converted into Bitcoin and subsequently transferred to Binance, leading to a BNB price boost. This unusual dynamic has led to a growing chorus questioning the authenticity of Binance’s business model, likening it to a multi-level marketing scheme.
The operational strategy under scrutiny involves the alleged manipulation of Ethereum fees, delaying lightning adoption, and imposing listing fees on ‘solution tokens’. Once listed, Binance reportedly pre-allocates these tokens, sells them, and then purchases Bitcoin and BNB with the proceeds.
Also Read – Binance Exchange Denies Allegations of Illegal Operations in China
This strategy, if true, raises several questions about the financial and regulatory implications. One such question is whether Binance is leveraging derivative trading for quick profits or using their reserve funds from marketing tokens to manipulate short-term volatility on trading pairs.
It’s also worth noting that despite these potential manoeuvres, BNB is still showing signs of weakness, an indicator of a lack of genuine buyers in the market. It’s a scenario reminiscent of Japan’s yield curve control (YCC), but the difference here is we’re talking about a crypto exchange, not a sovereign nation.
Interestingly, Binance is not alone in this predicament. Both Luna and FTX reportedly lost a significant portion of their Bitcoin reserves defending their tokens. So, what’s Binance’s endgame?
Why doesn’t Binance take a cue from Coinbase, register as a legitimate company in the US, and face any losses upfront? Critics argue that Binance managed to take the lead from Coinbase by allegedly accepting bribes, pre-purchasing tokens, and dumping them on retail investors – actions that are in stark contrast to the company’s commitment to protect its customers.
The recent news that the DOJ is considering fraud charges against Binance has added a further layer of intrigue to the unfolding drama. CZ, the man at the helm of Binance, is under intense scrutiny. Comparisons are being drawn between him and infamous figures like Bernie Madoff, pointing to CZ’s history with a market-manipulating trading firm in China.
Despite the growing controversy and market volatility, CZ appears unfazed, possibly believing that he can weather this storm and emerge stronger in a new market cycle. However, as different frauds within the crypto world begin to unravel, the base of new customers providing liquidity to Binance could shrink, forcing the platform to dig into its reserves.
All we can say at this point is… Investors, stay alert!