Binance Trading Frenzy Sends USD Stablecoin Crashing to $0.20

Key Points:The USD dropped to $0.20 against DAI Wednesday due to a single $647,000 Market Sell Order, which caused a cascade downward slippage to that level.
The New York Department of Financial Services (NYDFS), which ordered Paxos not to issue BUSD, will result in a decrease of its supply over time.
On Wednesday morning, Binance USD (BUSD), which is the third-largest stablecoin based upon market capitalization, saw a sudden drop of $0.20 to the DAI stablecoin. According to Coindesk, this happened because liquidity on Binance’s crypto exchange decreased. It was triggered by a single $647,000 market sell order, which caused a series price slippages that reached $0.20. BUSD quickly recovered its peg on Binance, despite DAI. Arbitrage traders took advantage and bought it for $1 on Binance, and then sold it for $1 on another exchange. According to Binance’s order books, it would take a $3.38m market sell to bring the price back to $0.20. This will eventually lead to a decrease of BUSD supply over time. Coincu previously reported that Paxos published a letter by Charles Cascarilla, its CEO, detailing the company’s doomed Binance USD stabilitycoin. It stated that “We Believe Unambiguously that BUSD Is Not a Security” on February 21.
The Howey Test or the Reves Test are the most common precedents for identifying securities in the US. BUSD fails to meet the criteria for security under either of these tests. Our stablecoins are backed by cash and equivalents dollars and US Treasury bills, but not securities.
Charles Cascarilla, Paxos CEO and Co-Founder wroteDISCLAIMER. The information on this website is intended to provide general market commentary but not as investment advice. We encourage you to do your own research before investing.Join us to keep track of news: NewsTags: Binancebinance coinBinance Smart Chain BUSDbinance usBinance-Peg BUSDBUSD