Binance's "Sleight of Hand": BNB Buyback Rule Change, Can Retail Investors Still Buy In?Recently, the crypto world was once again ignited by a "bickering" war, with the protagonists being Huobi, Binance, and OK, the three major exchanges. The trigger for this war was Binance's announcement on July 12th, stating that it had completed its eighth platform token BNB buyback and burn, and announced that it would prioritize burning the BNB held by the team in the future
Binance's "Sleight of Hand": BNB Buyback Rule Change, Can Retail Investors Still Buy In?
Recently, the crypto world was once again ignited by a "bickering" war, with the protagonists being Huobi, Binance, and OK, the three major exchanges. The trigger for this war was Binance's announcement on July 12th, stating that it had completed its eighth platform token BNB buyback and burn, and announced that it would prioritize burning the BNB held by the team in the future. This seemingly positive news sparked questions and concerns from industry insiders.
Looking back, in 2017, Binance promised during its platform token ICO that it would use 20% of its profits to buy back BNB circulating in the market. This rule was undoubtedly a major boon for the value of BNB, as buyback and burn can reduce the number of coins, thereby pushing up prices. This operating model has become the norm for many platforms, with Huobi and OK also conducting platform token buybacks.
However, Binance's recent announcement has a hidden agenda. Binance has a total of 200 million platform tokens, of which 40% (80 million) are held by the team and have been locked up. Binance previously promised that these locked BNB would never be sold. However, Binance's "promise" ultimately turned into an "empty check."
Binance's announcement to prioritize burning team-held BNB effectively means that they will no longer use real money to buy back BNB from the market, but will directly burn the BNB they hold. This "left hand to right hand" operation is essentially a disguised way to cash out the BNB held by the team, which will not have any impact on the actual circulation of BNB.
Why is Binance making this "sleight of hand" operation? The reason is not complicated. Currently, Binance faces severe external pressure. On the one hand, Binance has not been able to obtain licenses in major countries, leaving it outside of regulation. This has forced Binance to take measures such as blocking US IP addresses and promoting decentralized exchanges (DEXs) to cope. On the other hand, Binance's leading position is also being challenged by other exchanges, such as Matcha. To maintain its competitiveness, Binance has had to introduce leverage trading functions that it previously refused to open.
Under such pressure, Binance holds a large amount of BNB that cannot be cashed out, and is naturally eager to find ways to monetize it. Directly burning the team-held BNB has become Binance's best option. This operation can not only help Binance obtain funds in the short term, but also avoid market sell-off pressure and cash out at a high price.
However, for ordinary investors, this may not be good news. Binance's new buyback rules will directly limit the future growth prospects of BNB, and the price of BNB may fall as a result.
Precisely because of this, Binance's operation has triggered a strong backlash from its competitors. OK founder Xu Mingxing directly criticized Binance for tax evasion, and Huobi also stated that Binance's move was just to avoid buying back BNB circulating in the market, and everything was just an excuse.
As of now, the storm is still brewing, and the price of BNB has been declining for several days, falling by more than 10%.
So, in this situation, do investors still dare to buy BNB? This is indeed a question worth considering. After all, Binance's "sleight of hand" operation has cast a shadow over the future of BNB.
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