23 February, 2024

Solana Tanks as Binance, OKEX, Bybit Halt SOL-based USDT and USDC

1 year ago

22 Nov, 2023

The Solana blockchain’s SOL token dropped to a new post-FTX low of $12.45 on Thursday after Binance said that deposits of USD Coin (USDC) and tether (USDT) “have been temporarily suspended until further notice.”

Just hours later, other exchanges, notably OKX and ByBit, also disabled deposits for Solana-based stablecoins. ByBit apparently disabled deposits on November 17, the same day OKEX halted trading of the tokens at 3:00 am UTC.

FTX aftermath continues

SOL fell over 7% following the announcements. According to CoinMarketCap, the current price of a single Solana (SOL) token is $13.72.  This recent hit to SOL just makes a bad situation even worse in the current bear market.

Over the past week, cryptocurrency values have plummeted due to the FTX breakdown and subsequent bankruptcy declaration. Over the past week, the FTX token lost over 95% of its value, with other tokens also taking a hit.

Solana has suffered a severe setback because of Binance’s suspension. The downfall of FTX and Alameda has had a significant impact on the SOL blockchain and its native SOL token, and with good reason: the now-defunct Alameda was the major backer of SOL, and its former CEO, Sam Bankman-Fried, actively advocated it as an alternative to Ethereum.

As soon as FTX and Alameda came under scrutiny, the price of SOL dropped in tandem with FTX’s native FTT token because of its deep ties to the companies. Between the 7th and 9th of November, FTT dropped from $22.95 to $2.29, while SOL dropped from $32.48 to $12.62.

Analysts expect SOL to drop much lower after the bankruptcy processes of FTX and Alameda begin and their assets are liquidated. Alameda had $292 million in unlocked SOL, $863 million in locked SOL, and $41 million in SOL collateral as per the notorious balance sheet made public on November 2, which triggered the collapse of FTX.

On-chain data shows Solana-USDC has 62% more supply than Solana-USDT. At the time of writing, the total amount of USDC circulating on Solana equals to 5 billion USDC ($5 billion), or 11% of the token’s total market capitalization.