Cleared 300,000 BNB, how much selling pressure will the hacker's account still cause?

Author: Qin Xiaofeng, Odaily Planet Daily

In recent days, as the hacker's Venus account positions began to be liquidated on the BNB cross-chain bridge, crypto KOLs on external networks have started to focus on discussing the future trend of BNB. Pessimists believe that BNB may repeat the fate of FTT and head towards collapse, with some even drawing comparisons between the historical trends of the two, causing panic in the community. As shown below:

(KOL compares BNB with FTT prices)

The question arises: how much selling pressure will the recent liquidation of BNB cause in the market? To conclude, there is no significant impact; the liquidation of BNB positions on Venus is entirely managed by the BNB Chain team, and it will not be sold into the market, nor will there be large-scale cascading liquidations.

The incident dates back to October last year when a hacker exploited a vulnerability in the BNB cross-chain bridge "BSC Token Hub" to steal approximately 2 million BNB—at that time, the price of BNB was $280, with a total value of about $560 million. Subsequently, the hacker deposited 924,821 BNB into the lending protocol Venus, borrowing about $152 million in stablecoins (including $116 million USDT and $36 million USDC) and transferring them to other chains.

After the incident, BNB Chain promptly released a new version, BSC v1.1.15, which could prevent activities related to the hacker's account. Meanwhile, the BNB Chain node program used blacklisting and suspension features to stop the flow of stolen funds and potential attacks. In simple terms, the assets in the hacker's wallet (the remaining 1.02 million BNB and other stablecoin assets) were restricted from being transferred—essentially, the wallet's assets have been permanently frozen, and the hacker only truly stole over 900,000 BNB.

(Hacker wallet address assets)

At this point, the only headache for all parties is how to handle the BNB assets that have already been used as collateral on Venus. Directly reclaiming and destroying them at zero cost would mean a massive $150 million loss for Venus, which the depositors would obviously not agree to; if the Venus protocol were allowed to operate autonomously, reaching the liquidation price and automatically selling into the market, the large amount of BNB would lead to cascading liquidations, further suppressing the price of BNB, which also does not align with Binance's interests.

(BNB Chain community proposal)

Ultimately, Binance decided to absorb the losses and proposed a plan called VIP-79 to the Venus community, which was approved. The specific content was that a whitelist address controlled by the BNB Chain core team would act as the sole liquidator of the positions to safely control this massive supply of BNB and prevent cascading liquidations from occurring directly. Additionally, Binance promised that the liquidated BNB would not be sold into the market but would be destroyed after being reclaimed.

At that time, the liquidation price for the hacker's BNB positions on Venus was around 220 USDT, and the spot price of BNB was approaching this level. Therefore, BNB Chain transferred $30 million USDT to the whitelist address as backup liquidation funds to prevent short-term price drops from impacting the market. Interestingly, in the following weeks, the price of BNB began to rise, reaching nearly $400, moving further away from the liquidation threshold, and discussions about the selling pressure from BNB liquidations gradually decreased.

Until June 12 of this year, the price of BNB continued to decline, once again approaching the $220 liquidation line, attracting attention from the crypto community. BNB Chain also promptly supplemented $30 million in stablecoins to meet the challenge. This time, the price of BNB remained strong around $220 and began to rebound, avoiding liquidation once again.

On August 18, as the price of BTC significantly retraced, the price of BNB finally broke through $220, and the liquidation of the BNB positions in the Venus hacker address began (health factor below 1). On-chain data shows that on August 18, a total of 6.7431 million vBNB (Venus BNB) were liquidated, and the BNB Chain address paid over $30 million to reclaim approximately 140,000 BNB. At this point, the liquidation price of BNB dropped to around $211, with 784,615 BNB remaining in the hacker's address. As shown below:

On the evening of August 21, the price of BNB fell below $211, triggering liquidation again, with approximately $6.88 million vBNB being liquidated, and the BNB Chain address again paid over $30 million to reclaim about 156,200 BNB. As shown below:

As of now, the hacker account's remaining positions consist of 628,337 BNB, and the health factor of the Venus account has returned to 1.07; it is estimated that the next liquidation price will be around $199—currently, the price of BNB is $213, requiring a drop of 6.5%. The loan amount for this account is approximately $94.21 million, with the breakeven point for debt and collateral around $150; in other words, as long as BNB stays above this price, Venus will not incur financial losses.

(Venus hacker account)

Overall, in the past few days, BNB Chain has cumulatively paid $60 million to reclaim 296,400 BNB, with minimal impact on the market. The price of BNB dropped from a low of $220 to $203, with a maximum decline of 7.7%; currently, the price of BNB has only dropped 3.1% from the $220 on the 18th, while BTC's price has dropped 2.3% during the same period.

However, under the stirring of some individuals, BNB seems to have become a doomsday scenario, even being compared to the second FTT. In fact, the situation Binance is facing is not on the same scale as FTX: FTX misappropriated assets causing a gap of over $10 billion, while Binance is merely liquidating $150 million in hacker debt, and the entire process is transparent and open.

"I don't understand why people are worried about this small $180 million liquidation. BNB is not some random garbage with zero liquidity; Binance can easily handle this issue, they have dealt with bigger things in the past. I can understand the risks Venus is facing, but I believe Binance can easily manage a liquidation of nearly $200 million, even destroying these tokens." commented Abdul Rafay, co-founder of the cryptocurrency investment platform Zignaly.