The "unbearable pain" in the coin circle? Repeating the scene before the FTX crash: The sharp decline of Coin An Coin BNB

It has been a month since the collapse crisis of FTX, and just as many people believe that its former competitor, Coina, can "dominate" the cryptocurrency market, another crisis seems to be brewing.Data shows that, up to now, the original token BNB of Coin Security in the cryptocurrency exchange has fallen by nearly 15% in the past day and nearly 21% in the past week, the lowest level since July

It has been a month since the collapse crisis of FTX, and just as many people believe that its former competitor, Coina, can "dominate" the cryptocurrency market, another crisis seems to be brewing.

Data shows that, up to now, the original token BNB of Coin Security in the cryptocurrency exchange has fallen by nearly 15% in the past day and nearly 21% in the past week, the lowest level since July.

According to CoinMarketCap, BNB was first issued in 2017 and is the world's fifth largest cryptocurrency by market value, with a market value of approximately $39 billion, second only to Bitcoin, Ethereum, Tether, and USDCoin.

The collapse of FTX did not make Coin An worry free, on the contrary, the biggest problem faced by Coin An lies in this.Coin An was the first external investor of FTX, and when it withdrew from FTX's equity last year, Coin An received approximately $2.1 billion.

The collapse of FTX means that Coin An may receive the funds back. After FTX files a bankruptcy petition, the trustee wishes to recover any fraudulent fund transfers provided by FTX to external companies or investors.

In addition, data from the blockchain information platform Nansen shows that the net outflow of funds by Coin An reached 902 million US dollars in the 24 hours ended Wednesday, which is not only much higher than other exchanges, but also 9 times the second highest net outflow, the highest level in the past month. In the past 7 days as of Tuesday, the net outflow of Coin An reached $3.7 billion, and the net outflow from Monday to Wednesday reached nearly $6 billion.

Zhao Changpeng appeases the market

Faced with spreading market concerns, Zhao Changpeng, CEO of Coin An, affirmed the company's financial health in an interview with the media on Thursday:

We have no financial issues.

Regarding the huge net withdrawal, Zhao Changpeng stated on Twitter:

The situation seems to have stabilized. Our withdrawal was even more than when LUNA and FTX collapsed, and now the deposit has returned.

According to Nansen's data, Coin An had a net inflow of approximately 718 million US dollars within 24 hours, which seems to confirm Zhao Changpeng's claim that the situation has begun to ease, indicating that Coin An has sufficient financial reserves to face the wave of runs. Coin An also emphasized that the company stores customers' cryptocurrencies in a separate account, and they store user assets 1:1. The overall capital structure is debt free.

A spokesperson for Coin An told the media in a statement: "We passed this extreme stress test because our business model is very simple - custody of assets and revenue from transaction fees." The spokesperson added that Coin An also retained a $1 billion emergency fund to protect users from withdrawals in extreme situations.

But when asked if he was prepared to return the 2.1 billion US dollars, Zhao Changpeng replied that he would leave the issue to lawyers, and the market saw this as a tendency to evade.

The market is also skeptical of Zhao Changpeng's soothing remarks. Prior to the collapse of FTX, its executives were also aware that the company was in a liquidity crisis, but founder and former CEO SBF also claimed on Twitter that the company's assets were in good condition. In the end, the exchange was still unable to avoid bankruptcy.

What exactly is the market afraid of?

One possible reason for causing market panic is the recent news that the US government is considering filing a lawsuit against Qian An, believing that Qian An may be involved in crimes such as money laundering.

Last year, the media reported that Coin An is undergoing money laundering and tax investigations by the US Department of Justice and the Internal Revenue Service. Chainalysis Inc. is a blockchain forensics company with clients including federal agencies in the United States. The company concluded in 2020 that,In the transactions under its review, more funds related to criminal activities flowed through cryptocurrency than any other cryptocurrency exchange.

Although the US government has not yet confirmed that it will file a lawsuit against Qian An, the media pointed out that,After experiencing a series of events in the currency circle, investors are now cautious about placing funds on the exchange. Investors who are like frightened birds have become more sensitive, and the recent negative reports from Coin An have also led to a sudden increase in withdrawals.

Data shows that trading giants JumpTrading and Wintermute have both withdrawn a large amount of funds from Coin An in the past week, with JumpTrading being the largest withdrawer, withdrawing up to $146 million in 7 days, including $102 million in Coin An fixed currency BUSD.

According to CoinMarketCap data, the total supply of BNB is 200 million, of which the circulating supply is approximately 160 million. In June, the media reported that the US Securities and Exchange Commission was investigating whether token sales in 2017 amounted to providing securities and should be registered with regulatory authorities.

Henry Fisher, an analyst at Arkham Intelligence, a blockchain information platform, emphasized that the total assets of Coin An are as high as $64 billion, and there is currently no abnormal outflow of funds, so there is nothing to be alarmed about.

Coin security is' big but not collapsed '

On Friday, the accounting firm MazarsGroup also stopped providing reports to Coin and other cryptocurrency companies, exacerbating market concerns once again. This type of report aims to prove that these companies have the necessary reserves to cope with any potential surge in customer withdrawals.

It has been discovered that Mazars' official website has withdrawn the above-mentioned report provided for Coin An. In fact, it may be the lack of confidence in Mazars' reserve proof report in the market that led the company to stop all such work.

After the FTX crash, the dominant market position of Coin An did not provide people with much confidence guarantee,Coin An has become a market participant who is too big to fail. Unlike traditional finance, in the cryptocurrency market, there is no central bank as the lender of last resort, nor any subject that can prevent potential collapse, provide relief or ease the spread of the crisis.

Mark Lurie, CEO and co founder of ShipyardSoftware, a decentralized exchange developer, told the media on Friday:

I don't think Coin An is trying to create problems, but this organization is now a risk for all of us.

At any time, as long as one participant controls a large amount of trading volume, there will be many systemic risks.

According to CryptoCompare data, with the bankruptcy of the FTX Empire, Coin An's market share has increased to 52.9% - the largest in history, and its derivative trading share has also increased to 67.2%.

At the hearing of the US Senate Committee on FTX on Wednesday, Tennessee Senator Bill Hagerty stated that assuming a similar crisis occurred in Coin An, it would be catastrophic for the cryptocurrency industry and for all investors involved in the industry.

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