Binance halts USDC and USDT deposits on Solana in latest blow to blockchain
Editor’s Note: With so much market volatility, stay tuned for daily news! Get caught up in minutes with our quick summary of today’s must-read news and expert opinions. Sign up here!
(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,” prompting 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 remove USDC and USDT from Solana entirely, and will no longer support their deposits or withdrawals.
The Binance suspension is a significant setback for Solana. The blockchain and its original SOL token have been among the hardest hit by the implosion of FTX and Alameda, and for 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 option.
Due to 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 original 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 time frame.
As 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 November 2, which triggered the collapse of FTX, Alameda held $292 million in unlocked SOL, $863 million in 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 of the Solana-based FTX-backed decentralized exchange Serum 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 Nov. 9 about its exposure to FTX, since updated Nov. 15, which claims the Solana Foundation had approximately “$1 million in cash or cash equivalents at FTX.com as of 06/11/22 when FTX.com stopped processing withdrawals ” representing less than 1% of the foundation’s cash or cash equivalents, and “none of [their] SOL Custody at FTX.com.”
As of November 14, the Solana Foundation wrote that the assets held in their FTX.com accounts were approximately 3.24 million shares of FTX Trading LTD common stock, 3.43 million FTT tokens and 134.54 million SRM tokens.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
