BNB Chain’s native token slid over 7% while Binance USD (BUSD) stablecoins had high inflows to crypto exchanges in the past 24 hours as traders reacted to reports of BUSD issuer Paxos facing legal troubles in the U.S.
BNB tokens traded over $315 on Sunday before dropping to just over $290 in a 24-hour period. The nearly 7% fall marked the biggest drop for a major cryptocurrency as bitcoin (BTC) and ether (ETH) fell slightly below 3%.
BNB-tracked futures saw a relatively low $2.5 million in liquidations, Coinglass data shows, implying the move was mostly led by spot-driven sales.
Elsewhere, some $52 million worth of BUSD were sent to exchanges in a 24-hour period, data from CryptoQuant shows. As per CryptoQuant, the increase in inflow of any token to exchanges is mostly a bearish sign as it may precede traders selling their tokens.
“Instead of storing them in cold storage, moving into exchange wallets indicate the urge to turn coins into fiat or stablecoins,” CryptoQuant said in its data guide.
However, these inflows may also signal the use of stablecoins for the purpose of collateral for futures trades or to rebalance their portfolios generally, CryptoQuant added.
Meanwhile, CryptoQuant head of marketing Hochan Chung told CoinDesk in a Telegram message the inflows were likely stemming "due to the fear that BUSD redemption might be questionable from the past experiences with [crypto exchange] FTX and [CoinDesk sister company] Genesis."
"However, both Binance and Paxos guarantee that the redemption will be managed without the issue," Chung added, pointing out that the negative net flows decreased after Binance founder Changpeng Zhao alleviated concerns about reserve backing in a Monday tweet.
As per a WSJ report on Sunday, the U.S. Securities and Exchange Commission (SEC) Sunday alleges that BUSD is an unregistered security. The news came days after CoinDesk previously reported Paxos is under investigation by the New York Department of Financial Services, though the scope of NYDFS' investigation is unclear.
Paxos issues the Pax dollar (USDP) and Binance USD (BUSD) tokens, the latter is a Binance-branded stablecoin. Binance, on its part, told CoinDesk on Monday: “BUSD is a stablecoin wholly owned and managed by Paxos. As a result, BUSD market cap will only decrease over time.”
“Paxos also assured the funds are safe, and fully covered by reserves in their banks,” the Binance spokesperson said.
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