World’s largest crypto exchange Binance claims deposits have ‘stabilized’ after clients pulled $3B in a week – but CEO warns of ‘bumpy’ road ahead after pausing withdrawals of major token
- Binance CEO said deposits ‘stabilized’ after a run of withdrawals
- Binance temporarily halted withdrawals of major stablecoin USDC on Tuesday
- Clients withdrew a net $3 billion from the crypto exchange in one week
- Turmoil followed reports about a long-running US criminal probe into Binance
The head of major crypto exchange Binance said on Wednesday deposits were returning, a day after it saw heavy outflows of cryptocurrencies and halted some stablecoin withdrawals.
On Tuesday, blockchain data firm Nansen said Binance saw net withdrawals of $3.7 billion in crypto over the prior seven days, noting that Binance’s total assets were still worth more than $60 billion.
Binance, the world’s largest crypto exchange, also temporarily halted withdrawals of the major stablecoin USDC, citing a so-called ‘token swap’ and saying overnight that banks in New York needed to open to complete the transaction.
‘Things seem to have stabilized,’ CEO Changpeng Zhao tweeted. ‘Yesterday was not the highest withdrawals we processed, not even top 5.’
Following the collapse of rival FTX, Zhao told staff in a memo that the industry is going through ‘a historic moment’ but insisted that Binance is financially sound and ‘will survive any crypto winter,’ according to Bloomberg.
Binance CEO Changpeng Zhao said on Wednesday deposits were returning, a day after it saw heavy outflows of cryptocurrencies and halted some stablecoin withdrawals
‘Things seem to have stabilized,’ CEO Changpeng Zhao tweeted late Tuesday night
‘While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it,’ he wrote in the memo.
Zhao noted that the recent bankruptcy of major rival FTX and the arrest of its founder Sam Bankman-Fried had brought ‘a lot of extra scrutiny and tough questions’ on the crypto industry.
Binance has seen net inflows in the last 24 hours of tokens on the ethereum blockchain totaling around $718 million, Nansen told Reuters. Binance did not immediately respond to a request for comment.
How crypto exchanges such as Binance and its now-bankrupt former rival FTX handle customer deposits has come under close scrutiny from users, regulators and policymakers.
Binance said on Tuesday it always had ‘more than enough funds’ to meet withdrawal requests.
Blockchain data firm Nansen said Binance saw net withdrawals of $3.7 billion in crypto over the prior seven days
Nansen uses public blockchain information to analyze holdings of the major exchanges
‘User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free,’ a spokesperson said.
The exchange is also facing legal pressures. Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation, Reuters reported on Monday, sparking a 4 percent drop in Binance’s own BNB token.
The investigation is reportedly focused on Binance’s compliance with U.S. anti-money laundering laws and sanctions.
Nansen CEO Alex Svanevik told CNBC that the reporting on the criminal probe had lead to ‘concern in the market’ with investors staying cautious and withdrawing crypto from exchanges.
‘I would say that you’re definitely seeing larger than normal withdrawals from Binance,’ said Svanevik.
Binance said on Tuesday withdrawals of USDC were paused due to ‘token swap’ – where digital token holders exchange their crypto coins, typically over different blockchains
‘And so it is definitely worth keeping an eye on but as far as I can tell at this point in time, this is very different from the FTX situation,’ he added.
Svanevik noted that the withdrawals seen this week were a small proportion of Binance’s $60 billion worth of assets.
Zhao insisted that the run of withdrawals this week only served to prove the resiliency of Binance.
‘FUD brought ‘stress test’, which in turn helps to build the credibility for exchanges that passes the test,’ Zhao tweeted on Wednesday, using an acronym for ‘fear, uncertainty and doubt’ often used in crypto in relation to news perceived as negative.
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