Binance urges low cap projects to commit tokens to its savings product Binance urges low cap projects to commit tokens to its savings product
Binance said the move was optional and would help to create a safe and secure trading environment for its users.
2 min read
Updated: Aug. 25, 2023 at 1:03 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Binance confirmed to CryptoSlate, in an email dated Aug. 25, that it recently engaged with several low-liquidity tokens, offering recommendations on how they can improve their liquidity.
The exchange said the outreach was part of an “ongoing risk management initiative” geared towards “ensuring digital assets [on its platform] continue to meet the high standard level.”
A screenshot of the engagement shared on social media platform X showed that Binance asked the cryptocurrency projects about their relationships with market makers and their potential interest in committing between 1-5% of their token’s circulating supply to its savings pool for interest.
According to its website, Binance’s savings product enables users to leverage their dormant crypto assets for daily interest earnings. However, this product category has faced heightened regulatory scrutiny across multiple jurisdictions due to collapses involving similar offerings by crypto firms like Celsius, Helio, BlockFi, etc.
For context, the U.S. Securities and Exchange Commission (SEC) filed securities fraud charges against Celsius and its co-founder and former CEO, Alex Mashinksy, over its “Earn Interest Program.”
Binance, however, clarified that its outreach intended to “create a safe and secure trading environment for our users,” adding that participation in its savings pool was “entirely optional.”
It added:
“Engaging market maker support is one way to enhance such protection. Another possible risk mitigation measure is to make contributions on saving pools, such as Binance Savings. This is the place where users can borrow tokens from, either via Margin or Loan, and trade more actively to inject liquidity into the current market.”
Meanwhile, Binance is currently under regulatory armchair across multiple jurisdictions. The firm recently exited several markets in Germany, Austria, the U.K., and others in Europe because it failed to gain appropriate regulatory approval.
Across the Atlantic, the firm is being sued by the U.S. SEC and the Commodity Futures Trading Commission (CFTC). The Department of Justice (DOJ) is reportedly investigating the firm and its CEO, Changpeng Zhao, for violating anti-money laundering laws.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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BNB, or Binance Coin, is a cryptocurrency created by Binance.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.
