The native token of Binance, crypto’s largest exchange, has snapped a slide that stoked nervousness among digital-asset investors.

BNB has bounced some 10% over the past two days to $245, whereas an index of the largest 100 coins is little changed, data compiled by Bloomberg shows.

The token sank about 25% from June 5 through June 12 — hitting the lowest level since 2022 — after the US Securities and Exchange Commission sued Binance Holdings Ltd. and founder Changpeng Zhao for rule breaches.

The agency also said BNB is one of a raft of unregistered securities in the digital-asset sector. The token is crypto’s fourth-largest with a market value of $39 billion, according to CoinGecko. Users get discounts on trading fees, and the success of the coin and Binance are seen as intertwined.

Binance’s responses to the SEC lawsuit have helped to steady BNB but there are risks ahead as the US Department of Justice could follow up with charges, said Markus Thielen, head of research at Matrixport.

“More negative news could still be hitting the tapes,” he said, adding that $200 is a “psychologically important” level to watch for BNB.

Rejecting Speculation

Twitter was rife with speculation that Binance sold its own holdings of Bitcoin and stablecoins — tokens that are meant to have a constant $1 value — to raise funds for use in propping up BNB’s price.

A Binance spokesperson rejected the speculation, saying that the company didn’t make any such sales to generate funds to support BNB.

The SEC accused Binance and Zhao of mishandling customer funds, misleading investors and regulators, and breaking securities rules. Binance has called the action “disappointing” and said it intends to defend its platform “vigorously.”

Investors have become alert to the native tokens of crypto exchanges after the implosion of FTT, the coin of FTX, contributed to the latter’s chaotic demise. The wipeout also left the sector on edge about the resilience of trading venues.

The Binance spokesperson said user assets at the exchange “are all backed 1:1” and that it can always meet withdrawal requests “because we run a very simple business model — hold assets in custody and generate revenue from transaction fees.”

Ongoing Risks

Some investors pulled funds from Binance in the wake of the SEC lawsuit, leading to seven straight days of net outflows on the Ethereum blockchain. The peak drawdown was $702 million right after the agency’s action, based on a Dune Analytics dashboard from exchange-traded products issuer 21Shares AG.

The outflows ebbed and on Monday there was a net inflow of $455 million into Binance’s platform, the dashboard shows.

Still, some onlookers remain cautious. Cici Lu, founder of blockchain adviser Venn Link Partners, said “reputational and headline risks will definitely hurt Binance as a brand for now.”

--With assistance from Olga Kharif.