Binance Coin Plunges Amid Liquidation Risk

Binance Coin (BNB), a leading cryptocurrency, is experiencing a sharp decline in value, now trading at $260, due to SEC scrutiny against Binance US and broader market trends. 

BNB's recent drop risks triggering a potential $200 million liquidation on Venus Decentralized Autonomous Organization (DAO) if the price descends by 14% to $220. Venus DAO governs Venus Protocol, a decentralized lending platform on the Binance Smart Chain. An October 7th, 2022 exploit saw an attacker mint 2 million BNB ($593 million), depositing a portion as collateral on Venus to launder funds. This is the single largest potential liquidation in Decentralized Finance (DeFi).

Following the exploit, BNB Chain halted for network upgrades, making the Binance Bridge hack the third-largest overall. The incident underscores DeFi ecosystem vulnerabilities, particularly with cross-chain bridge exploits. To halt cascading liquidations, the BNB Chain will liquidate the position. Venus DAO's decision to whitelist BNB Chain as the sole liquidator for the BNB exploiter address aims to stabilize the market.

Data from research firm Nansen revealed that net outflows from Binance and Coinbase have declined in the 24 hours following the SEC’s lawsuit against Coinbase. Compared to the situation 24 hours after the SEC sued Binance, when Binance’s netflow was $78M positive, the decrease in net outflows suggests that investors are cautious due to increased regulatory scrutiny on major cryptocurrency exchanges.