Binance Customer Withdrawals Reach Record Levels

Join Our Telegram channel to stay up to date on breaking news coverage

Binance, the world’s largest crypto exchange by trading volume, endured a series of withdrawals on Monday, December 12, amid concerns about its proof of reserve report.

Following the collapse of crypto exchange FTX, panic spread across the crypto industry, making investors overly skeptical about the security and assurance that comes with centralized exchanges and service providers.  While Binance enjoys the trust of many in the crypto space beginning its launch, the next few weeks may not be as smooth. Already, Binance has recorded huge withdrawals, most of which have come in the last week summing up to $8.6 billion. 

In a report, blockchain analytics firm Nansen said that Tuesday recorded the highest amount of daily withdrawals since June, which pushed up the weekly figure to $8.6 billion, with a lesser inflow that left the Binance exchange with a significant deficit.

The withdrawal trajectory has continued as the world’s largest crypto exchange continues to record massive withdrawals over the last several days, sparking concerns over the exchange’s future. From the reports, Binance saw $8.6 billion in withdrawals against a $5.1 billion inflow, leading to a $3.6 billion deficit.  Net outflows, which is the difference between the value of assets arriving and leaving the exchange, hit $902 million between Monday, December 12, and Tuesday 13.

Based on data provided by blockchain data platform Arkham Intelligence, the outflow was the highest for Binance since November 13, two days after cryptocurrency exchange FTX filed for bankruptcy. In a Telegram chat, an Arkham analyst has explained that the outflow does not seem notably unusual because there is an ostensible $64 billion worth of assets on Binance.

With this streak of withdrawals, Binance’s figures topped other centralized exchanges (CEXs), including Coinbase and Binance US, which recorded net outflows of about $800 million and $38.7 million respectively.

The withdrawals were actions by individuals and companies, including crypto firm JumpCrypto, which led the pack in making the highest withdrawals from the CZ-led exchange. Within two weeks, JumpCrypto has taken out $146 million from Binance’s balance sheet.

In the face of the concerning trend, Binance CEO Changpeng Zhao has however put off fears and investor concerns, saying it was “business as usual,” citing the typical business occurrences of bad days and good days.

CZ also made a follow-up tweet, this time reassuring that things were going back to normal, saying, “Things seem to have stabilized. Yesterday was not the highest withdrawal we processed, not even the top five. We processed more during LUNA or FTX crashes. Now deposits are coming back in.”

Nevertheless, despite the long record of withdrawals, Binance maintains its position as a giant exchange, holding assets worth more than $58 billion, which signals a sturdy financial base for the exchange.

Fear Intensifies As Binance Halts USDC Withdrawals

On Tuesday, Binance paused withdrawals of USD Coin (USDC), a move that the CEO attributed to “token swap issues.” Notably, in September, Binance announced a token swap policy that would see USDC and two other stablecoins converted to BUSD.

The initial halt was very concerning to exchange users, spurring fear and tension before the CEO came out to explain that they received an increase in USDC withdrawals and the banks were not open for two hours of the halt because swapping tokens requires traditional fiat at the bank.

CZ also added, “We will also try to establish more fluid swap channels in the future. In the meantime, feel free to withdraw any other stablecoin, BUSD, USDT, etc.” Nevertheless, USDC withdrawals have since resumed on the Binance exchange and the company has given assurance that funds are backed 1:1.

Criminal Charges Against Binance

In other news related to Binance, the giant exchange released a report by South African auditing firm Mazars last week, showing that its Bitcoin (BTC) reserves are overcollateralized.

The document has however been attacked with recent reports arguing that it was narrow-scoped. Industry pundits have also flayed it supporting the narrow-scope argument. Commenting on the Wall Street Journal’s report on the exchange’s PoR, law scholar John Reed Stark said in a tweet:

“Binance’s “proof of reserve” report doesn’t address effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers. I worked at SEC Enforcement for 18+ yrs. This is how I define “red flag.”

On Monday, Reuters reported that U.S. prosecutors are contemplating criminal charges against Binance and its executives (CZ included), on grounds of money laundering. Changpeng Zhao has however urged his 8 million followers on Twitter to “ignore the FUD”.

FUD is a crypto slang for spreading ‘fear, uncertainty, and doubt’.

Related News:

FightOut (FGHT) – Newest Move to Earn Project

FightOut token
  • Early Stage Presale Live Now
  • Earn Free Crypto & Meet Fitness Goals
  • KYC Verified by CoinSniper
  • LBank Labs Project
  • Partnered with Transak, Block Media
  • Staking Rewards & Bonuses

FightOut token


 

Join Our Telegram channel to stay up to date on breaking news coverage

Source: https://insidebitcoins.com/news/binance-customer-withdrawals-reach-record-levels-is-bankruptcy-looming