Binance Handles Massive Withdrawals Amid FUD

Earlier this week on Monday, the news break out that the U.S. DoJ is considering the possibility of filing criminal charges against Binance and its executives. As a result, the crypto exchange has witnessed strong user activity and major withdrawals over the last two days.

On Tuesday, the world’s largest crypto exchange witnessed record daily outflows worth $1.14 billion. As per data from CryptoQuant, a net of 40,353 Bitcoins and 278,017 Ether tokens were withdrawn.

Binance recently published its Proof-of-Reserves report by audit firm Mazars showing that its BTC holdings exceed customer deposits on a single day in November. Basically, the exchange wanted to show that they have sufficient crypto assets in balance for its total platform liabilities.

However, many expressed limitations of the report stating that this is not a full financial audit. Thus, it doesn’t give a clear picture of Binance’s overall health”. This has served as a catalyst for more withdrawals on the platform.

Binance chief Changpeng Zhao shared the withdrawal statistics on Tuesday, adding that there’s nothing much to worry about and it’s business as usual for Binance. Zhao added:

“We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us. I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. It costs some network fees to run these “tests”. But keeps the industry healthy. Exchange business is simple”.

Binance’s Reassurance Over Reserves

In an email to Bloomberg, a Binance spokesperson said that the company is absolutely debt free. He further added:

“People deposit and withdraw assets everyday for a variety of different reasons. User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free. We maintain hot wallet balances to ensure that we always have more than enough funds to fulfill withdrawal requests and we top up hot wallet balances accordingly”.

Coming back to the Mazars’ report on Binance’s Proof-of-Reserves, the crypto exchange said that they are working further to ensure more transparency in the matter. “We are working collaboratively with Mazars to share all relevant financial information with them so that they can verify the accuracy of all the data we have shared as well as our process for extracting the data,” the spokesperson said. “We are working on getting the next update for additional tokens published as soon as possible.”

The recent turn of events certainly brought some selling pressure to Binance’s native crypto BNB Coin which corrected 5% on Tuesday.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.