Bitcoin price is loitering in anticipation of crypto’s next big scandal.

The cryptocurrency is changing hands at $16,820.90, up by almost 1 percent from its price a day ago, as of this writing.

That’s decent range-bound performance from an asset whose credibility has been pummeled by numerous collapses in its ecosystem in the last six months. “You are not going to have a major sell off moment until we see a new story that’s being discussed,” OANDA analyst Edward Moya told CoinDesk’s First Mover show this morning.

Binance and Bitcoin Price

The biggest catalysts for that story might be at Binance, the world’s biggest exchange by trading volume. Even as it attempted to take leadership of crypto after FTX’s fall, Binance itself has become a honeypot for controversies.

What’s more, the two biggest trading markets – responsible for roughly 77% of the cryptocurrency’s total trading volume, as of this writing – for bitcoin are at Binance and both involve controversial stablecoins – Tether’s USDT and BUSD. The number of problems at Tether at too many to elucidate. BUSD’s attempts to become a beacon of stability, as I have written earlier, are also a sham.   

For those interested, bitcoin’s price remains unchanged even as the difficulty level for the algorithm used to mine it has become easier in recent times.   

Ready, Set, Go?

The probability of another domino falling in crypto only a matter of time. Disgraced former FTX CEO Sam Bankman-Fried (SBF) has pleaded not guilty and is set to go on trial soon. His former colleagues Caroline Ellison and Gary Wang are already cooperating with authorities. Expect a steady drip of revelations in the coming weeks as the case comes to trial.

Meanwhile, hedge funds are also reported to be considering the notoriously difficult option of shorting Tether. Regulators have already issued a warning to banking organization detailing the risks prevalent in crypto assets Among these risks are fraud, legal uncertainties, and misrepresentations regarding reserves and the possibility of a run at stablecoins.

Thanks to wall-to-wall news coverage of the industry in recent weeks, most banks are already familiar with the first two risks. The third one should make itself evident soon.

Liquid Staking Tokens Jump

In a moribund market, tokens from liquid staking platforms are providing some cheer. Their prices jumped yesterday. Lido overtook MakerDAO to become the biggest DeFI trading protocol by Total Value Locked (TVL) last week and its token – LDO – surged  by 26% this week. Prices for Rocket Pool’s RPL token jumped by 12% and those for StakeWise’s SWISE token were up by an astounding 66% in the same period.   

Because crypto is cryptic, we don’t know why investors are pushing up prices for tokens specifically at these platforms. At CoinDesk’s show this morning, Messari research analyst Kunal Goel said the tokens were up in anticipation of Ethereum’s Shanghai Upgrade later this quarter. The upgrade will enable withdrawals of staked ether – some of which have been locked for as long as two years – and allow shorter staking periods.

But that event is still some time away. Besides the state of crypto right now hardly engenders optimism about its outlook.

TVL Increase?

The increase in TVL could also be a possible reason for the price increase. But TVL is a metric laden with errors and it relies on cumulative additions of risky derivatives to inflate the overall value locked in the system. It relies on a cryptocurrency’s price for increases. Solana, a token that was trading at depressed prices earlier due to its association with SBF, has recovered. As a result, its share of the overall TVL value has increased.

Consider Lido. The platform enables staking across five networks. You can stake, or deposit, your cryptocurrency, say Ethereum, and receive its staked version, say staked ether (stETH), in exchange. This staked token derivative can be used for a variety of activities, some of which may occur on the same protocol, and also across differ decentralized finance (DeFi) systems.

Each use case builds additional risk into the system and inflates the supposed ‘value’ count. Double counting and, in some cases, triple counting of the same token in its derivative form is possible.

BRB With Your BNB

On the topic of liquid staking, BNB has the biggest numbers of such tokens across platforms. According to data from Messari, 90% of BNB is staked at platforms that enable liquid staking.

When Binance launched liquid staking for BNB last year, the token’s staked version was available at Ankr – a blockchain infrastructure platform, Stader – staking platform, and pStake – another liquidity staking platform.

Things haven’t turned out all that well since.

Ankr suffered a $5 million exploit two weeks ago during which the hacker minted 20 trillion Ankr Reward Bearing Staked BNB (aBNBc) and dumped them to decimate aBNBc’s price to $2 from $300.

Another party affected during the hack was Helio Money – a ‘destablecoin’ that had earlier announced that it will use decentralized assets, such as BNB, for collateral. The hacker purchased a big tranche of aBNBc and swapped them for Helio’s stablecoin. Both tokens are pegged to each other, meaning their prices are supposed to match. The hacker, subsequently, used Helio’s stablecoin HAY to purchase BUSD – Binance’s stablecoin, and made a profit of 5,209 percent. Stader labs suffered its own exploit last August.

BscScan tells me that the biggest locations for staked BNB are PancakeSwap, a decentralized exchange, and pStake, a liquid staking platform. The latter, in fact, accounts for a massive chunk of all staked BNB in circulation. Its BNB derivative tokens are used at various DeFi platforms like Alpaca Finance, where they are prone to losing their pegs with the original token. In effect, they multiply risk associated with the token by disseminating it across multiple platforms.

Considering that this entire boondoggle is unregulated, it means that ninety percent of BNB is floating around in derivative form susceptible to hacks and frauds.