Allegations of Binance Dumping Bitcoin to Settle $4.3 Billion Fine

Binance and grayscale banners with a garbage truck dumping bitcoins

A recent tweet by a crypto analyst has stirred controversy within the bitcoin community, accusing Binance, the world’s largest cryptocurrency exchange, of being a key contributor to the recent downturn in bitcoin’s value. The tweet suggests that Binance has sold over $5 billion worth of bitcoin since the start of the year, ostensibly to cover a substantial fine imposed by US authorities. The tweet, supported by a chart detailing bitcoin’s price and daily net outflows from Binance, Grayscale Bitcoin Trust (GBTC), and the US market, has sparked a lively debate.

Binance’s Role in Bitcoin Price Decline

A contentious tweet by a crypto analyst has ignited a fervent discussion within the bitcoin community, alleging that Binance, the world’s largest cryptocurrency exchange, is a key player in the recent decline of bitcoin’s value. According to the tweet, Binance has reportedly offloaded over $5 billion in bitcoin since the year’s commencement, purportedly to cover its substantial fine to US authorities.

The Guilty Parties

Posted by @DU09BTC on Saturday, January 20, the tweet presents a chart illustrating bitcoin’s price alongside daily net outflows from Binance, Grayscale Bitcoin Trust (GBTC), and the US market. The chart implies that Binance has consistently engaged in significant bitcoin sales, with GBTC and the US market also contributing to the overall sell-off. The tweet suggests:

If you don’t know who’s dumping, here are the guilty parties:

  • GBTC – they are selling half a bil / day in BTC
  • US Market – leading the sell-off since mid-Jan
  • Binance – sold over $5 bil in BTC since Jan 1st

Data in the pics. Once US stops selling, up only.

Otteroooo Speculates Binance Sells to Pay Fine

The tweet has sparked varied opinions within the community. Some users endorsed the analysis, while others questioned its credibility. One prominent comment by @Otteroooo raised speculation about Binance’s CEO, Changpeng Zhao (CZ), potentially selling user bitcoins to settle his fine:

“is cz selling user bitcoins to pay his fine?

or are users selling bitcoins to sell the etf news

we will never know”

This comment alludes to Binance and CZ pleading guilty to federal charges, agreeing to pay over $4 billion to resolve a Justice Department investigation. As part of the plea deal, CZ resigned as Binance CEO and paid a $50 million individual fine.

Impact of Spot Bitcoin ETF Approval

The comment also touches upon the recent approval of 11 bitcoin exchange-traded funds (ETFs) by the SEC. While seen as a significant milestone, analysts warned of a potential “sell the news” event, with some investors capitalizing on the anticipated announcement.

Binance has yet to officially respond to these claims, and the origin of funds for the fine remains undisclosed. Crypto experts suggest Binance may have used reserves, fee profits, or its native token, Binance Coin (BNB), to cover the cost. BNB has also experienced a notable price decline, dropping from over $330 to below $314 in the past days.

Binance is Not The Only Culprit

The allegation of Binance dumping Bitcoin to pay its fine casts a long shadow over the recent market movement, but it’s not the only potential culprit worth considering. Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin investment product, deserves closer scrutiny in this narrative.

GBTC has been plagued by a widening discount to its net asset value (NAV) for months, signaling investor skepticism and potential outflows. The @DU09BTC tweet claims GBTC is shedding half a billion dollars in Bitcoin daily, which, if true, could exacerbate this discount and trigger a domino effect impacting Bitcoin’s price further.

Grayscale’s Internal Struggles

Moreover, the timing of these alleged GBTC outflows coincides with increased regulatory scrutiny surrounding its conversion to a spot ETF. Uncertainty about this potential conversion, compounded by the widening discount, could be driving significant investor exits from GBTC, feeding into the broader market sell-off.

Therefore, while the finger points towards Binance and the US market, GBTC’s role as a potential catalyst for the Bitcoin downfall shouldn’t be overlooked. Its internal struggles and regulatory hurdles pose a real threat to market stability, potentially amplifying the impact of other forces at play.

As regulatory scrutiny and competition intensify for Binance, debates regarding its role in the bitcoin market persist. Bitcoin’s price continues to fluctuate, currently trading at around $41,000, down from over $46,000 in leaa than two weeks.

Author: Jinka

Jinka is a self-trained crypto journalist, passionate about happenings in the industry.