Cryptocurrency prices dropped Monday after the Wall Street Journal reported that Binance CEO Changpeng CZ Zhao suggested in a private conversation that the crypto exchange’s affiliates had conducted wash trading several years ago. Bitcoin (BTC) briefly dipped below $29,000 for the first time in more than a month, while Ripple’s XRP and Solana’s SOL led the fall among major alternative cryptocurrencies, or altcoins.
That was ourselves, I think, Zhao said in an internal message, according to the Journal. Wash trading refers to the process of artificially inflating transaction volumes by trading with yourself or an affiliated entity.
A spokeswoman for Binance, which was founded by Zhao, told the newspaper that neither the company nor Zhao has engaged in or tolerated wash trading. Binance dismissed wash trading allegations in an email to journalists.
Binance does not engage in or tolerate wash trading, which is a violation of our terms of use, nor has it ever done so, Binance’s spokesperson said.
The WSJ’s report also said Binance’s representative dismissed the SEC’s charge as unfounded. Binance is the world’s largest cryptocurrency exchange by trading volume. Thus, regulatory uncertainty surrounding Binance tends to weigh on crypto prices.
At the same time, China’s ruling Communist Party’s 24-member Politburo said the country’s economy is facing new difficulties and the economic recovery will be challenging. Early this year, analysts widely cited China’s reopening of its economy as a major bullish tailwind for risk assets, including cryptocurrencies.
Importantly, Politburo’s readout published by the official Xinhua News Agency did not include large-scale fiscal and monetary stimulus announcements.
Bitcoin is beating a slow retreat at the moment as the price continues to trend down from recent highs, said Simon Peters, markets analyst at digital brokerage platform eToro. Although market dynamics in summer months can tend toward volatility with lower trading flows, the recent period has been remarkably calm for top crypto assets in the market.