U.S. Department of Justice officials are considering fraud charges against @Binance. Still, they are cautious about the potential consequences, fearing it could trigger an FTX-like run on the exchange, potentially causing customer losses and cryptocurrency market panic, – wrote Semafor on Wednesday, citing the sources familiar with the matter.
The price of the $BNB token immediately fell following the report but has not yet broken out of that consolidation phase. However, on higher timeframes, it appears to be on the verge of a potential breakdown.
Officials around the world have been investigating Binance publicly, and the CFTC previously sued the company and its CEO, CZ, for “willful evasion” of U.S. laws. However, the collapse of FTX last year and the history of failed firms in traditional finance raise concerns about the risk of targeting “systemically important” institutions like Binance.
“But wait, we’ve got DeFi!” they said.
Yes, we do. And speaking about DeFi…
Curve liquidation risk after the last week’s exploit poses a systemic threat to DeFi, and the founder’s efforts to repay loans may not be enough to mitigate the potential consequences: a cascade of liquidations in high-profile loan portfolios. So yes, it’s not your ordinary weekly DeFi exploit.
Numerous insightful reports and studies have been published on this subject, which may seem overwhelming even. But, to simplify the initial DYOR steps and add a somewhat emotional tone for further exploration, I’d suggest to start with this thread:
Certik, Rekt, and Llama Risk have provided a detailed breakdown of the technical aspects of the exploit. Chainalysis shared their blockchain analysis on this, too.
But on the very basic level, this is primarily a story about reckless leverage, liquidity, and solvency, again, which is perfectly illustrated in the threads on the links.
(Thread)
Now the Curve founder Michael Egorov is attempting to pay off his reckless mountain of DeFi debts by selling CRV on OTC markets at a discount. He sold CRV tokens for $2 mln to Aave founder, for $4 million to Huobi’s Jun Du, made a deal with Tron founder Justin Sun, etc.
As of Thursday, Michael Egorov has sold 72 million CRV tokens in OTC deals in exchange for $28 million (out of $60+ mln), according to @lookonchain.
(@_Checkmatey_ of @Glassnode)
Talking about the crypto market reaction as a whole,
Yay. But:
From the technical perspective, many see this situation as a “make or break” moment for BTC (and hence for broader crypto):
Regarding some fundamentals and long-term perspective, this time, I’d refer to the David Puell’s of Ark Capital monthly report (thread):
Almost all analysts also highlight that BTC’s realized volatility is now at multi-year lows (more stable than gold and stocks even), suggesting a decisive move is approaching with every passing day.
While Alex Krüger, economist and trader, notes that statistically, the most recurrent outcome from periods of such low volatility has been upward movement.
