Binance, perhaps the lone-standing prominent crypto exchange post the FTX fiasco, seems to also be facing intense pressure from traders. Amid global crypto fears, the exchange has witnessed withdrawals amounting to $1.9 billion in the past 24 hours, according to blockchain data firm Nansen. This marks the largest daily outflow since at least June 2022, according to Nansen, and makes up the majority of the $2.2 billion Ethereum-based withdrawals that the crypto exchange clocked in the last seven days.
This development comes just days after Binance reported on a proof-of-reserves report by audit firm Mazars last week, which showed that its holdings of the popular cryptocurrency Bitcoin exceeded customer deposits on a single day in November. According to a spokesperson for Nansen, the withdrawals at the leading crypto exchange were rising owing to the increasing uncertainty about its reserves report.
However, Binance assuaged possible fears as CEO Changpeng Zhao tweeted that the withdrawals were “business as usual.” “We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits,” he tweeted.
A surge in withdrawals in Binance almost mirrors what happened to fellow crypto exchange FTX last month. Unlike Binance however, it failed to meet increasing customer demands and had to freeze withdrawals on its platform for a while after an $8 billion hole was discovered in its finances. Continuing to take hits, FTX had reached out to Binance for help, and once those talks fell through, it triggered a dramatic collapse that saw Sam Bankman-Fried’s crypto empire crumble within days and owe billions to its numerous creditors.
Binance has fared better than its rival, whose fall cemented its dominating position in the crypto industry. According to a spokesperson for Binance, the capital structure of the crypto exchange was free of debt and all user assets at the crypto exchange were always backed 1:1. “People deposit and withdraw assets every day for a variety of different reasons,” the spokesperson said, adding that the world’s largest crypto exchange always had “more than enough funds” to meet and fulfill withdrawal requests of users.
This development also comes as Binance put a temporary halt on the withdrawals of the USDC stablecoin. It attributed the halt to a “token swap,” wherein the crypto exchange swaps one cryptocurrency for another without the need for fiat currency. Zhao said that swapping USDC with two other tokens – Paxos Standard and Binance USD – required the usage of traditional dollars through a New York-based bank. This meant that the banks would not “open for another few hours. We expect the situation will be restored when the banks open.”
$USDC withdrawals are back online. Thank you for your patience.
— Binance (@binance) December 13, 2022
The USDC stablecoin withdrawals have since been restored.