Binance halts USDC and USDT deposits on Solana in latest blow to the blockchain

Binance halts USDC and USDT deposits on Solana in latest blow to the blockchain

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(Kitco News) –

Binance announced Thursday morning that deposits of USD Coin (USDC) and tether (USDT) on the Solana blockchain “have been temporarily suspended until further notice,” causing the blockchain’s SOL token to test its post-FTX low of $12.45.

The move comes hours after another crypto exchange, OKX, announced that it will delist USDC and USDT on Solana altogether, and will no longer support their deposits or withdrawals.

The Binance suspension is a significant setback for Solana. The blockchain and its native SOL token have been among the hardest hit by the implosion of FTX and Alameda, and with good reason: the now-bankrupt Alameda was the single-largest backer of SOL and former CEO Sam Bankman-Fried personally promoted it as an Ethereum alternative.

Because of its close association with the firms, as soon as FTX and Alameda began to come under fire, the price of SOL sold off in lockstep with FTX’s native FTT token. FTT fell from $22.95 to $2.29 between November 7 and 9, and SOL fell from $32.48 to $12.62 during the same timeframe.

Once FTX and Alameda’s assets begin to be liquidated as part of their bankruptcy proceedings, SOL is expected to crash further. According to the now-infamous balance sheet published by Coindesk on Nov. 2, which set the collapse of FTX in motion, Alameda was holding $292 million of unlocked SOL, $863 million of locked SOL, and $41 million in SOL collateral.

Beyond the value of the SOL token, there are also concerns about the underlying Solana blockchain. After the $477 million ‘hack’ of FTX, which many believe was actually an FTX or Alameda insider stealing assets, there were concerns that the private keys to the FTX-backed decentralized exchange Serum, which is based on Solana, may have been compromised. These keys were held directly by FTX, and the situation necessitated an emergency fork of the protocol to ensure its independence from FTX and Alameda insiders.

Solana posted a fact sheet on Nov. 9 about its exposure to FTX, since updated on Nov. 15, which claims that the Solana Foundation had approximately “$1M in cash or cash equivalents on as of 11/6/22 when ceased to process withdrawals” representing less than 1% of the Foundation’s cash or cash equivalents, and “none of [their] SOL custodied on”

As of Nov. 14, the Solana Foundation wrote that the assets stuck in their accounts were approximately 3.24m shares of FTX Trading LTD common stock, 3.43m FTT tokens, and 134.54m SRM tokens.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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