The Department of Justice (DOJ) is reportedly treading carefully in its legal approach to Binance, one of the world's largest cryptocurrency exchanges. The concern is that public charges against BINANCE could trigger a massive sell-off similar to the FTX collapse in November 2022, causing widespread market instability.
The collapse of FTX, a prominent crypto exchange, in November 2022 sent shockwaves through the crypto community. The event led to a market-wide depression in price and volume, from which the industry has yet to fully recover. The memory of FTX's downfall is still fresh in the minds of crypto participants, making the situation with Binance particularly sensitive.
Binance's sheer size and influence in the crypto market make the potential legal actions against it a matter of great concern. The fear is that public charges could lead to an "FTX-style run," where users would panic, flee the platform, and sell their crypto en masse. Such a scenario could have far-reaching consequences, not just for Binance but for the entire crypto ecosystem. The DOJ's reported exploration of alternative legal avenues, such as fines and deferred or non-prosecution agreements, reflects an understanding of these potential ramifications.
Base Launches, Quickly Experiences First Rug
Base is an Ethereum Layer rollup 2 solution built on the Optimism tech stack by Coinbase. Though not officially live, Base launched its “developer mainnet,” enabling developers to build applications on the chain. However, even before its official launch, users found ways to bridge to the chain by sending Ethereum (ETH) to a proxy contract.
Developers were quick to explore the platform's potential, launching various projects and derivatives. However, the excitement took a dark turn on the 29th with the launch of the notorious $BALD token. This memecoin, poking fun at the hairstyle of COINBASE CEO Brian Armstrong, started as a humorous venture and quickly gained attention and market cap on the blossoming rollup chain. The deployer of the token contract continually added liquidity as the coin's value soared, fueled by eager participants. With a total of 6,700 ETH added, the token's market cap surged to just short of $100 million.
The story took a shocking twist after 24 hours when the deployer executed a "rug pull," removing all liquidity and absconding with over 3,000 ETH. This event sent shockwaves through the community, highlighting the risks and vulnerabilities inherent in the nascent world of decentralized finance (DeFi). While the $BALD incident was the most prominent, it was not isolated. Smaller scams and rug pulls were rampant on the Base chain, casting a shadow over what had started as a promising development in the blockchain space.
