The world’s largest cryptocurrency exchange by trading volume, Binance, has been the subject of recent crypto-market speculators after blockchain watchers discovered massive deposit outflows totaling billions of dollars, the company’s auditor refused to cooperate, and rumors that the company may be under investigation by American authorities surfaced.
Such concerns are amply demonstrated by the recent downward trajectory of BNB, the native coin of Binance: The price has dropped by approximately 17% this month to $245, significantly trailing the CoinDesk Market Index, which measures all digital assets and is down 5.7%. BNB traded at $690 at its high in May 2021, based on information from CoinMarketCap. Market valuation for the cryptocurrency has decreased from a record high of $116 billion earlier this year to about $40 billion today.
The question of whether Binance would be susceptible to a loss of confidence comparable to the startlingly quick collapse of Sam Bankman-FTX Fried’s exchange in November is at the heart of the worries. And it’s impossible to overlook the fact that FTX’s own FTT coin started to fall, which was one of the first indications of serious distress there.
Therefore, as crypto analysts focus on the value of the BNB token, they also carefully examine the price history of the FTT token to look for any warning signs that might have alerted investors to the market’s vulnerability. And a crucial resemblance sticks out: BNB is absent from a significant number of U.S. exchanges, much like FTX’s FTT token had mostly failed to get listed on significant U.S. crypto platforms. (Binance.US lists it there.)
Some crypto analysts speculate that major U.S. exchanges might have steered clear of a BNB listing for fear of running afoul of regulators. Any issues on the regulatory front could also represent a risk for holders of the token.
“Exchanges probably do not list BNB as they see it as a security given the centralization of their network,” said Lucas Outumuro, head of research at IntoTheBlock, in an interview with CoinDesk. “It’s probably not worth U.S. exchanges risking listing a security especially if it’s a competitor’s token.”