Crypto sleuths investigating the US Treasury General Account (TGA), drew a parallel between US Treasury Department’s actions and that of Binance when they sold $1 billion of the Industry Recovery Fund in Q1 2023.

Binance Says They Had Propped Liquidity In Q1 2023

In Q1 2023, there were suspicions that Binance, the world’s largest cryptocurrency by trading volumes and client count, was propping up liquidity in the cryptocurrency market.

The speculation of potential market manipulation by Binance gained more traction when Changpeng Zhao, the CEO of Binance, converted a staggering $1 billion worth of Binance USD (BUSD) from the Binance’s industry fund to Bitcoin (BTC), Ethereum (ETH), and Binance coin (BNB).

Related Reading: Gemini And Genesis File Motion To Dismiss SEC Lawsuit Over Defunct Earn Offering

This move artificially injected buying pressure into the market, forcing the Bitcoin price to surge past $22,500. Ethereum also rose to reclaim the $1,600 mark, and BNB soared by over 10%, reaching a two-week high by surpassing $300.

The decision to convert the $1 billion Industry Recovery Fund to other coins, investigators allege, was a move to possibly inject liquidity in the crypto market.

At that time, banks were under pressure and crypto-supportive institutions like Silicon Valley Bank (SVB) even faced a crisis, impacting the USDC causing it to de-peg briefly.

Though there has been no solid link between the move by Binance and market manipulation, investigators now have their eyes on the US Treasury General Account (TGA) and how it is rapidly falling.

US Treasury Aping Binance?

With banks under pressure, crypto sleuths are observing the TGA account. It serves as the bank account through which the US government manages national debt and pays treasury yields.

Observers noted that the Treasury has been supporting liquidity in the US economy, similar to what Binance reportedly did in Q1 2023, by tapping into this account since interest rates began to rise.

In 2022, the account held approximately $1 trillion, but its balance has steadily decreased, with the current balance standing at around $38 billion. This rapid depletion is because the Treasury needs to keep the government running.

With the TGA running low, the Secretary of the Treasury, Janet Yellen, issued a warning, stating that without congressional action to raise or suspend the $31.4 trillion debt ceiling, the US government could default as early as June 1.

Yellen wrote a letter to Congress, highlighting the urgency for action and the potential consequences of inaction.

The Treasury Department projects that without an increase in the debt limit, the government will only be able to meet its financial obligations until June 1, leaving only 10 days for negotiators and lawmakers to resolve. With policymakers agreeing to raise the debt ceiling, the government will issue bonds, raise yields, and pressurize Bitcoin prices in the days to come.