Binance founder Changpeng Zhao (CZ) has reportedly told staff to expect some difficult months as the leading cryptocurrency exchange is seeing customer withdrawals. The warning comes while the crypto industry is facing challenges after high-profile bankruptcies and amid tightening regulations.
$3 Billion Pulled Out From Binance at Peak, Nansen Data Shows
Binance, the world’s largest crypto exchange by trading volume, saw net outflows reaching $3 billion on Tuesday, Nov. 13, blockchain analytics firm Nansen revealed. The news comes as Changpeng Zhao, founder and chief executive of Binance, sought to assure his team that the company is strong enough financially to survive the crypto winter.
Binance Netflow 7D ($) -3,660,311,347
8,783,380,428 – Outflow
5,123,069,081 – Inflow
Exchange Flows dashboard ️https://t.co/CYrBQLryQ0 pic.twitter.com/vV6vcqoWKK
— Nansen 🧭 (@nansen_ai) December 13, 2022
The coin trading platform has been dealing with the effects of a string of negative events in the sector, including the collapse of FTX, a major competitor in the exchange market which filed for bankruptcy protection in November. FTX founder Sam Bankman-Fried was arrested in the Bahamas on charges filed against him in the United States.
A report by Reuters about an investigation by the U.S. Department of Justice into Binance was also a factor in investors’ nervousness, according to Andrew Thurman, content lead for Nansen, who commented on the outflow for CNN. Headlines that prosecutors are considering a money laundering probe also came against a backdrop of speculation about Binance’s reserves.
Binance currently holds $60.4B in their publicly disclosed addresses
And others pic.twitter.com/sgr6RTIRYx
— Nansen 🧭 (@nansen_ai) December 14, 2022
CZ Acknowledges Withdrawals, Seeks to Downplay Outflow and Calm Down Colleagues
In a tweet posted on Tuesday, Changpeng Zhao acknowledged the outflow of funds while insisting that Binance has been in similar situations before. “Some days we have net withdrawals; some days we have net deposits. Business as usual for us,” he said, suggesting “it is a good idea to ‘stress test withdrawals’ on each CEX on a rotating basis.”
Meanwhile, the crypto executive also sought to alleviate concerns about the exchange’s health in a memo addressed to its staff. According to a report by Bloomberg quoting the document, Zhao emphasized that the industry is going through “a historic moment” in which Binance is in a strong financial position and “will survive any crypto winter.”
“While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it,” CZ told the Binance team. Referring to the latest developments in the space, he added that the recent collapse of FTX has led to “a lot of extra scrutiny and tough questions” for his exchange.
What do you think future holds for Binance and other major cryptocurrency exchanges? Share your thoughts on the subject in the comments section below.