Binance withdrawals jumped to $3 billion in 24 hours, says Nansen

Hong Kong

Investors withdrew as much as $3 billion from Binance on Tuesday, according to blockchain research firm Nansen, the world’s largest cryptocurrency the stock exchange confronted investors̵[ads1]7; nervousness amid a deluge of negative headlines about the industry.

Andrew Thurman, chief content officer for Nansen, told CNN that at its peak, Binance saw “as high as $3 billion in net outflows” over a 24-hour basis. A report about an ongoing investigation by the U.S. Department of Justice into the exchange was a factor in investor jitters, he said.

“At the same time, a major market maker, Jump, was found to have withdrawn huge sums from Binance without deposit over the past few weeks – ultimately, it appears to have caused nervousness among both retail and institutional users,” Thurman said. “In short, there’s a lot of money going out, and that has scared some people.”

Jump Crypto is part of Jump Trading Group, a quantitative trading firm.

Earlier Tuesday, Binance had already seen its “highest daily withdrawals since June,” according to Nansen’s analysis. The withdrawal rate has since stabilized at about $79 million in net outflows, the firm’s data showed Tuesday evening ET.

Investors in the industry, already struggling with the “crypto winter” triggered by the collapse of Terraform Labs in May, are dealing with a major blow from the fall of crypto exchange FTX, which declared bankruptcy in November. Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas this week after US prosecutors filed charges against him.

Binance was also in the headlines. On Monday, Reuters reported, citing unidentified sources, that US prosecutors were considering ending a money laundering investigation into Binance by “filing criminal charges against individual executives, including founder Changpeng Zhao.”

The US Justice Department did not immediately respond to a request for comment outside US business hours.

In a statement to CNN, Binance said that “as has been widely reported, regulators are conducting a comprehensive review of each crypto company.”

“This emerging industry has grown rapidly and Binance has demonstrated its commitment to security and compliance through major investments in our team, as well as the tools and technology we use to detect and deter illegal activity,” a spokesperson added.

Zhao acknowledged the outflow situation on Tuesday, tweeting that at one point Binance had seen “some withdrawals” of approximately $1.1 billion.

“We’ve seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us,” he wrote.

In his Twitter post, the billionaire tried to strike a good note, suggesting that it was “a good idea” for every crypto exchange to generally face “stress test withdrawals.” He later added that Tuesday’s withdrawal was not among the highest the company had processed.

In a statement to CNN, Binance added: “User assets at Binance are all backed 1:1 and Binance’s capital structure is debt-free.”

Binance had initially offered to help bail out smaller rival FTX, before pulling out of the deal last month.

On Tuesday, Bankman-Fried was indicted in the United States on eight criminal charges, including wire fraud and conspiracy. Separately, US market regulators accused Bankman-Fried of defrauding investors and customers.

Bankman-Fried, known as “SBF”, is a crypto celebrity who became an overnight pariah when his company suffered a liquidity crisis and filed for bankruptcy last month, leaving at least one million depositors unable to access their money.

— CNN’s Matt Egan and Allison Morrow contributed to this report.

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