BUSD is dying fast. It's market cap is down 70% in 6 months. And it's a symptom of the wider problems across Binance

BUSD's markaet cap peaked at USD$23.5 billion in November, 2022, and it is dwindling down toward nothing.

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BUSD Market cap, Oct 12, 2022 - June 11, 2023, Coingecko.com

It's fallen from USD$13.3 billion 4 months ago to about $3.8 billion now, and the market cap continues to fall. It's lost about USD$338 million in the last week. At this rate, assume BUSD is fully collateralized, it will be gone in about 12 weeks.

BUSD Market cap, Feb 12, 2023 - June 11, 2023, Coingecko.com

However, alongside a string of other allegations against Binance, Bloomberg reported earlier this year that at times BUSD has been undercollateralized by as much as $1 billion. Binance argues it is fully collaterialized again, but against Binance's wider problems it seems hugely risky to hold any BUSD when there is a possibility there may not be enough collateral supporting the remaining few billion.

When did BUSD start it's rapid decline??Paxos Trust Company announced in February of this year that it would stop issuance of new Binance USD (BUSD) stablecoins in response to an ongoing investigation by New York regulators. Effective from February 21, no new BUSD tokens will be minted, marking the end of Paxos' relationship with Binance. Despite this, Paxos assured that all existing BUSD tokens will remain fully backed and redeemable through the company until at least February 2024. Users can also convert their BUSD tokens to another Paxos-issued stablecoin, Pax Dollar (USDP).

In other words - there are no guarantees that BUSD will exist in 6 months time, and the current rate of decline suggests it could dissapear faster than that.

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BUSD Market cap, Jun 4, 2023 - June 11, 2023, Coingecko.com

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What are the other allegations against Binance?

The Commodity Futures Trading Commission (CFTC) is suing Binance and CZ for "wilful evasion of US law." along with a long list of other allegations including that:

• Binance traded crypto-related derivatives with US customers without regulatory permission and despite announcing in 2019 that it would no longer serve US customers.
• Binance facilitated potentially illegal activities, including transactions related to the Islamic militant group Hamas.
• Binance used a loophole that allowed customers to evade Know Your Customer (KYC) procedures if they withdrew less than two bitcoin in one day.
• Binance continued to serve US customers despite saying it would stop, and that a significant portion of its trading volume comes from the US (and in some cases, giving customers direct instructions about how to use VPNs to access their services.
• senior Binance managers facilitated breaches of US law by helping US customers evade compliance controls.
• Binance was trading against its own customers through 300 "house accounts" directly or indirectly owned by Zhao. They were manipulating their own order books to liquidate customers, along with a list of other shady practices to take advantage of their customers.
• VIP customers were given advance warning of any law enforcement activity related to their accounts, according to the CFTC.

The SEC has has a range of allegations against Binance - there's no point in rehashing them in this post, because they are already all over this sub.

Binance struggles in other markets

Canada: Binance chose to leave the Canadian market, refusing to comply with consumer protection and financial regulations.

United Kingdom: The UK's Financial Conduct Authority (FCA) has previously said in 2021 that Binance was not a business that could be regulated in the UK because of the way they operate. The FCA is requiring all crypto firms to register, and demonstrate they have processes in place to prevent money laundering and terrorism financing. They have not done this.

Australia: Recently revoked Binance's license after wrongly classifying retail customers, to avoid consumer protection regulations.

Binance is losing banking partners around the world, as the allegations of money laundering, regulatory breaches, violations of consumer protection laws and pressure from enforcement agencies ramp up.

Why would you risk holding BUSD right now?

We've got Bloomberg revealing consistent and ongoing problems with the Binance-Peg BUSD reserves coming up short by a cool billion. Yep, a billion with a 'B'. They claim it's just 'operational reasons', but funds are safu. Great.

Then, Binance is accused of breaking about as many US laws as they can, and not just that - helping their customers find ways to break the law as well. They're even accused of trading against their own users (anyone surprised? This sub has been complaining about that for years).

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Market price (USD$) of BNB, May 12, 2023 - June 12, 2023

BUSD may just slowly burn out, unlike stablecoin catastophes like Luna a year ago - but there still is that billion that has been missing before. There's only a few billion BUSD left, so it's anyone's guess as to whether that peg will hold out down to the last dollar - and Binance will obviously want to maintain that peg because it's a symbol of the security of the company as a whole. But we've seen with stablecoin collapses a year ago, that once stablecoins start to spiral, the entire ecosystem and connected coins can collapse (and BNB is looking incredibly shaky now too).

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https://preview.redd.it/3nf0w7s8xc5b1.png?1200&format=png&auto=webp&s=11ff2b18864e4cd4eef72f285f36f70182ab0b76

BUSD had a market cap of $23.5 billion once, it's now down to $3.8 billion now. Most people believe that Binance has buckets of money, and can weather every crash, as they have previously. Who wants to be the last one holding BUSD, or assets in Binance if the music stops?