Binance temporarily suspends USDT and USDC deposits on Solana network

Solana’s price falls and Binance is taking corrective action: temporarily suspending Tether (USDT) and USD Coin (USDC) deposits on the Solana blockchain. 

The world’s best-known and most widely used exchange platform, Binance, is customary to protect itself from any problems that could put the company at risk, and this is one of those moves that makes that clear. 

The reasons are intuitable. Unlike other blockchains, Solana’s was closely linked to FTX. 

In the wake of this, Binance joined the list of major crypto exchanges that have suspended support for transactions on Solana. In addition to Crypto.com, also OKX and Bybit announced the suspension of deposits in USDC (SPL) and USDT (SPL).

“USDT/USDC on other chains operate normally of course. FTX was an important bridge/venue for SOL-based stablecoins, we do not want any additional risk to our users coming from this area, hence disabling it.”

From the words of the CEO of Crypto.com one can infer the same concern as Changpeng Zhao.

The CEO of Binance has always taken the position that transparency should be one of the principles of the crypto ecosystem. 

Binance decides to suspend USDC and USDT deposits on Solana: SOL price continues to fall

In the past few hours, the price of SOL has fallen by 3.48%. According to Solana’s price monitoring, the outlook is not very optimistic and further decline is expected.

Solana had opened the week with a price of $32, but after the Binance-FTX case, it suffered an incredible bearish movement that caused it to lose 65% of its value in just a few hours. 

At present, after the 15% rebound on 10 November, the price of Solana marks a loss of almost 50%. 

This collapse, which is partly due to the generalized chaos in the crypto market, has been associated with the relationship between the founder and former CEO of FTX, Sam Bankman-Fried, and the crypto SOL.

SBF has always been a supporter of Solana, both ideally and economically, so much so that he is regarded by the crypto world as a kind of ambassador for the project. However, the correlation between the two companies is unidirectional. According to statements by Solana founder Anatoly Yakovenko, Solana Labs did not hold capital on the SBF exchange.  

Should the affair continue, the price of Solana (SOL) could drop in price, breaking its $10 support, a level that has not been touched since 2021. 

Will the collapse of FTX take Solana with it?

There is now no need to provide an introduction to what brought Sam Bankman Fried’s company to failure; the exchange liquefied in a matter of hours, bringing with it no shortage of problems.

The contagion effect created difficulties for any projects gravitating around FTX.

Solana is one of the companies closest to FTX and its collapse. Part of Solana’s market value can be attributed to investments by Alameda Research and thus FTX.

According to the Solana Foundation report, the group would hold about $1 million in cash or equivalent on FTX. We are talking about a minimal amount, which can be considered a sum of money now lost. 

More complex is the asset situation, which can even be described as more worrisome. At the time the bankruptcy proceedings were initiated, 3,240 shares of FTX Trading LTD, 3,430 FTT tokens, and 134,000 SRM tokens were owned by the Solana group. By now these assets are worth approximately zero. In fact, we are talking about assets of a company destined for bankruptcy.

The situation is very complex, the reported data must be evaluated individually, for the time being, the measures taken by the other exchange platforms seem to be temporary, once the situation becomes clear, the deposits will probably be released. One can possibly draw a lesson for the future: projects that are so tied to a single funder can have these kinds of problems.

What do investors think about this?

Twitter has always been the most followed social platform for the crypto world. In this time of crisis, investors are letting their ideas and thoughts on the matter run wild.

Here are some tweets, such as Ran Neuner’s:

“Solana gets killed. The market realizes that @cz_binanceora owns 10% of the tokens and would rather support the BNB chain than SOL. Solana also just lost all the support and investment that FTX and@SBF_FTX were making in the ecosystem.”

Next comes statements from Philip Poulakis:

“apparently the Alameda report had $1.1 billion of solana in assets.”

The affair definitely unleashed on Twitter endless conversations, dissenting opinions, debates, and much more. What remains at the moment is simply to wait for more light to be shed on the issue.