At 6:50 AM on June 21st (US time), the price of Bitcoin (BTC) experienced a sudden and significant surge to an unprecedented high on the Binance.US exchange in the BTC/USDT trading pair. However, this surge lasted only a few seconds before the price quickly returned to the prevailing market price observed on other exchanges.
According to CoinMarketCap data, the world’s largest cryptocurrency was trading around $29,000 per BTC.
There were no unusual fluctuations observed in Bitcoin trading pairs with other stablecoins.
CoinDesk reports that this unusual phenomenon occurred in the context of Bitcoin having lower liquidity than Tether (USDT) on the Binance.US exchange.
Market depth data indicates that a $400,000 Bitcoin purchase in this pair could cause a price difference of up to 2%, compared to a minimum of $824,000 in the Bitcoin/USD pair to have a similar impact.
Market depth refers to the liquidity level in a financial market. According to data from Kaiko earlier this month, the market depth of Binance.US has decreased by 76% compared to the previous month. This indicates that market makers and investors are leaving the exchange.
In early May, the U.S. Securities and Exchange Commission (SEC) accused billionaire Changpeng Zhao and Binance of violating investor protection rules. Binance is the world’s largest cryptocurrency exchange by trading volume.
The allegations stated that the company operated an unregistered securities exchange, manipulated trading controls, and engaged in other violations.
A few months ago, the U.S. Commodity Futures Trading Commission (CFTC) also accused Zhao and Binance of repeatedly violating its regulations.
Based on documents and messages collected by the Wall Street Journal from 2018 to 2020, Binance attempted to circumvent laws by establishing a branch in the U.S.
Binance.US was created and claimed to operate separately from Binance to avoid regulation, but in reality, both entities have close ties.