Binance (BNB-USD) enjoys a reputation few others in the crypto space even come close to. The company is the largest and most household name in the market, enjoying billions of dollars in transactions across its exchange each day. FTX, up until its demise, was perhaps the closest to unseating Binance from its unchallenged status. And unfortunately for Binance, the company now has its own reckoning to do as FTX crumbles. Could the BNB crypto be in danger as a result of the FTX contagion?
It’s easy for other companies to see Sam Bankman-Fried’s crypto empire turn to dust and celebrate. It means less competition, after all. And if these companies aren’t conducting their own illegal practices behind the scenes, they don’t run the risk of a similar fallout.
Yet, there’s a lot of danger for the whole industry. This is most obvious looking at customer withdrawals across exchanges. Crypto holders do not trust centralized exchanges and, as a result, they’re yanking their assets from those exchanges’ custody. Billions of dollars have been pulled from Binance’s exchange in recent weeks, and other exchanges are suffering similar fates.
Institutional crypto broker Genesis has also seen its share of volatility at the hands of the news as well. The company suspended withdrawals as a direct result of the crypto price turmoil FTX inflicted on the market. Moreover, it and its parent company Digital Currency Group are stuck in a debt trap after Genesis didn’t have $900 million to pay clients of the company’s partner venture with Gemini.
Quite obviously, FTX’s demise is having more unsavory effects on crypto companies worldwide than one might have originally anticipated. But Binance specifically is seeing increased doubt from investors and analysts. Some think that the BNB crypto — the fifth-largest crypto in the world — could be in danger.
Binance Crypto BNB Under Scrutiny for Similarities to FTX’s FTT
Binance is attempting to assuage its worried clients after FTX Token (FTT-USD), the official crypto of FTX, turned out to be a central part of FTX’s scheme. However, these efforts have proven more detrimental than helpful. And in recent days, analysts and investors have been pondering whether the BNB crypto could be the next crypto to fall apart.
BNB and FTT are similar in that they are the official cryptocurrencies of their respective trading platforms. Both of these cryptos are used to pay trading fees, though they both have other applications in staking and passive income generation. Though they bear other similarities as well — particularly, the fact that both have struggled to find listings in the U.S.
FTT and BNB have been largely forgone as listings by U.S. companies. If American investors want to buy either, they must typically go through FTX.US for FTT and Binance.US for BNB. Of course, FTT access is entirely cut off as the American spinoff spirals into bankruptcy alongside its global counterpart. And the BNB crypto threatens to find itself in a similar position.
In recent days, the U.S. Securities and Exchange Commission (SEC) has branded FTT legally as a security, rather than a currency. With this label, it has been able to press additional charges against FTX and Alameda Research executives atop those made by the U.S. Department of Justice. This precedent would allow the SEC to then take on BNB and punish Binance for listing the coin.
Crypto analyst Cory Klippsten is predicting that the BNB crypto will soon disappear from U.S. exchanges as a result of the charges. Of course, Binance has already shown a willingness to de-list cryptos when the SEC labels them securities. However, being Binance’s own cryptocurrency, it will be interesting to see how the company handles this situation. Regardless, it could point to turmoil on the road ahead for BNB.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
