An unprecedented amount of withdrawals hit the world’s biggest cryptocurrency exchange Binance on Monday, as crypto investors and traders expressed concern over the exchange’s proof of reserves report.
New data by blockchain analytics platform Nansen indicates that, in the last 24 hours, $902 million worth of assets have left the exchange. This net outflow is a gap between the funds entering and exiting the exchange, indicating a decrease in activity on the platform.
Binance has seen the highest net outflow of any centralized trading platform over the last 24 hours, surpassing the second-largest outflow nine times over.
This was Binance’s biggest outflow since November 13th, just a few days after FTX collapsed.
In any case, Henry Fisher, an Arkham’s strategist, noted that the outflow doesn’t seem unusual given Binance’s ostensible $64 billion in assets.
An increase in withdrawal rates followed a series of negative news stories related to Binance, adding to investors’ caution about holding their assets on centralized exchanges. After FTX collapsed, along with other failures in the industry, other exchanges have been forced to prove that the assets of their users are secure.
Binance May Face a Criminal Charge
An audit report made by Mazars for Binance last week indicated that the venue’s reserves in BTC were overcollateralized. The report has been faulted by industry professionals and several publications as lacking adequate detail.
Former US SEC regulator John Reed Stark described Binance’s recent proof of reserves report as a red flag. According to him, the report fails to prove that the company’s internal financial controls are effective, provides no opinion or assurance conclusion, nor does it verify the reported financial data.
After that, yesterday, media outlets reported that US authorities are considering criminal charges against CEO Changpeng Zhao and his exchange for possible money laundering.
No comment was received from Binance. CEO CZ warned his followers on Twitter not to fall for the “FUD” — a slang term that means spreading fear and uncertainty.
Jump Trading and Wintermute, two major cryptocurrency trading firms, have been among the ones in the past week that have been transferring large amounts of assets from Binance, on-chain data indicates.
The most significant withdrawal from Binance has been made by Jump Trading, according to Andrew Thurman, a Nansen analyst.
A total of $146 million of digital currency have been withdrawn from the exchange by Jump-associated wallets over the past week, Nansen’s data reveals.
Total net withdrawal by Jump includes $102 million of the exchange’s stablecoin, Binance USD; $14 million of Tether USDT; as well as $10 million of Ethereum.
Wintermute, a major market maker in the industry, pulled out $8.5 million worth of wrapped Bitcoin and $5.5 million worth of Circle’s USDC stablecoin from Binance.
In a tweet on November 9th, Wintermute confirmed that some assets were still on Bankman-Fried’s exchange FTX, which suffered a tremendous collapse shortly after. In a tweet on November 12th, Jump Trading stated that the company continued to be financially strong but did not indicate if it had suffered any losses or had some serious financial links to FTX.