Investors withdrew up to $3 billion from Binance on Tuesday, according to blockchain analytics firm Nansen, as the world’s largest cryptocurrency exchange grappled with investor jitters amid a barrage of negative headlines about the sector. .
Andrew Thurman, head of content at Nansen, told CNN that, at its peak, Binance recorded “up to $3 billion in net outflows” in 24 hours. A report on an ongoing US Department of Justice investigation into the exchange was a factor in investor jitters, he said.
“Simultaneously, it was discovered that a major market maker, Jump, had withdrawn large sums from Binance without deposits in recent weeks – seems to have caused jitters among retail and institutional users,” said Thurman.
“In short, it’s a lot of money going out, and that scares some people.” Jump Crypto is part of the Jump Trading Group, a quantitative trading company.
On the previous Tuesday, Binance had already recorded its “biggest daily withdrawals since June”, according to analysis by Nansen. Since then, the withdrawal rate has stabilized at approximately $79 million in net outflows, company data showed Tuesday night.
Industry investors, already grappling 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 criminal charges against him.
Binance was also in the headlines. On Monday, Reuters reported, citing unnamed sources, that US prosecutors were considering ending a money laundering investigation into Binance by “bringing criminal charges against individual executives, including founder Changpeng Zhao.”
The US Department of Justice 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 all cryptocurrency companies.”
“This nascent industry has grown rapidly, and Binance has demonstrated its commitment to security and compliance through major investments in our people, as well as the tools and technologies we use to detect and prevent illicit activity,” added a spokesperson.
Zhao acknowledged the exit situation on Tuesday, tweeting that Binance had already seen “some withdrawals” of approximately $1.1 billion.
“We’ve seen this before. Some days we have net withdrawals; some days we have liquid deposits. Business as usual for us,” he wrote.
In his Twitter post, the billionaire sought to strike an upbeat note, suggesting that it was “a good idea” for each crypto exchange to generally face “stress test withdrawals”. He later added that Tuesday’s departures were not among the highest the company had processed.
In a statement to CNN, Binance added, “User assets on Binance are all backed 1:1 and Binance’s capital structure is debt-free.”
Binance 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 felony counts, including wire fraud and conspiracy. Separately, US markets regulators also accused Bankman-Fried of defrauding investors and customers.
Known as “SBF,” Bankman-Fried is a crypto celebrity who became an overnight outcast when his company suffered a liquidity crisis and filed for bankruptcy last month, leaving at least a million depositors unable to access their funds. .
*Matt Egan and Allison Morrow of CNN contributed to this story
Source: CNN Brasil
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