Binance CEO Changpeng Zhao, also known as CZ, said on Tuesday on Twitter his exchange had processed around $1.14bn of withdrawals, but said a day later “things seem to have stabilized,” adding that the Luna and FTX collapses of May and November 2022 respectively saw more withdrawals. Binance is the world’s largest crypto exchange.
Blockchain analytics firm Nansen said on Tuesday the outflow figure could be as high as $3bn in 24 hours.
“Investors are apparently fleeing Binance due to fears stoked by its reserve report published last week, in which some experts claim it did not go into enough detail on aspects including the effectiveness of internal financial controls. On Tuesday we also learned that US prosecutors are now considering criminal charges against Binance executives, including CZ, for alleged money laundering,” one industry insider said.
“Binance is an enormous institution that has jurisdictions all over the world. As such it is largely beyond the reach of the Department of Justice and Securities and Exchange Commission (SEC) in the US, despite frequent attempts to sanction it for some alleged misdemeanor or other,: the insider continued. “This is the reason US lawmakers and regulators were so keen to court Sam Bankman-Fried: a US citizen with connections to the US establishment, as the Grand Statesman of crypto. Through him, they were hoping to onboard numerous traditional institutions into this profitable world.
“They have since discovered, though, that Sam may be a criminal. This has put them in a very difficult position in which they have to haul one of their biggest donors in front of them for an investigation. It is perhaps unsurprising, under the circumstances, that FTX’s once biggest competitor, which has a vast global base, is now coming under the scrutiny of US law enforcement.”
USD Coin (USDC) withdrawals from Binance were paused completely following CZ’s announcement.
Binance’s head of intelligence and investigations, Tigran Gambaryan, said Binance has responded to over 47,000 law enforcement requests since November 2021.