February 8, 2023

Amid the fear and uncertainties that have beclouded the entire sphere of cryptocurrency, one of the first-tier cryptocurrency exchanges which also doubles as the most popular platform in the world, Binance has seen investors withdraw well over $3 billion worth of assets within 24 hours. according to blockchain analytics firm Nansen, as the global largest cryptocurrency exchange met face-to-face with investors’ reactions to FUD and the deluge of negative headlines about the industry.

In an interview granted by the Nansen’s Andrew Thurman, he expressed to CNN that Binance experienced a peak of outflow that’s “as high as $3 billion in net outflows” over a 24-hour basis. Similarly, the report about the arrest of FTX CEO and subsequent ongoing investigation by the US Department of Justice into the exchange culminated in investors’ nervousness, he said.

The Concurrent exchange market maker, Jump, was found to have withdrawn huge sums from Binance with no equal worth of deposits over the past few weeks — ultimately seems to have puzzled both retail and institutional users, Thurman revealed. “In short, it’s a lot of money headed out, and that’s spooked some folks.” He added.

In the early hours of Tuesday, Binance had already seen its “highest daily withdrawals since June,” based on Nansen’s analysis. Although the rate of withdrawals has since stabled to approximately $79 million in net outflows, the firm’s data showed as of Tuesday evening. 

Investors in the industry, already trembling with the “crypto winter” flashed by the collapse of Terraform Labs in May, are dealing with a huge blow from the fall of crypto exchange FTX, which was declared bankrupt in November. Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas this week after US prosecutors filed criminal charges against him.

Binance was also in the News headlines on Monday, Reuters reported, citing unidentified sources, that US prosecutors were considering synopsizing up a money laundering investigation into Binance by “filing criminal charges against individual executives including the founder of Binance Changpeng Zhao.”

The US Department of Justice did not immediately respond to a request for comment outside US business hours.

According to CNN, citing a statement sent to it, Binance said that, “as has been reported widely, regulators are doing a sweeping review of every crypto company.”

The spokesman for Binance also emphasized that the industry has grown quickly and Binance has shown its commitment to security and compliance through large investments in their team as well as the tools and technology they use to detect and deter illicit activities.

In his tweet Zhao acknowledged the outflow situation on Tuesday, stating that Binance had at one point seen “some withdrawals” of about  $1.1 billion.

“We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us,” he tweeted.

In his Twitter post, the billionaire subtly suggested that it was a good idea for each crypto exchange to witness stress test withdrawals generally. He later added that The outflows on Tuesday were not among the highest they had processed.

CNN, citing a statement provided by Binance to the media house, Binance added that User assets on Binance are all backed 1:1 and Binance’s capital structure is debt-free.

Binance had initially extended an offer to help bail out smaller rival FTX, before pulling out of the deal in November.

1 of 1 Photo in Gallery©Bloomberg Key Speakers At IIF Annual Membership Meeting

On Tuesday, Bankman-Fried was indicted in the United States on eight criminal charges including wire fraud, money laundering, and conspiracy. Separately, US markets regulators also charged Bankman-Fried with fraud against investors/customers

Founder of crypto exchange FTX faces charges from multiple U.S. agencies (independent.co.ug)

Known as “SBF,” Bankman-Fried is a crypto celebrity who became a pariah overnight. His company suffered a liquidity crisis and filed for bankruptcy last month, leaving at least a million depositors unable to access their funds.

The market has reacted negatively to the development as the BTC that has posed for a rebound is now stagnant at $17,720 at the time of filing this report.


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