As users continue to withdraw funds, Binance, the world's largest cryptocurrency exchange, has recently experienced a "gold rush". The net outflow of funds in the past week alone has reached US$3.6 billion. Yesterday (13th), USDC withdrawals were temporarily suspended. Although trading has resumed, people are still worried. In this regard, Binance reiterated that user assets are supported by reserves and stated that the exchange has no debt, trying to eliminate concerns about capital outflows.
Since the sudden collapse of FTX and news of the collapse of several cryptocurrency companies, users have become more cautious about storing funds on exchanges. In order to give investors more peace of mind and ensure that their funds have not been misappropriated, Binance immediately started preparing for the "Certificate of Reserves". Unexpectedly, the report was questioned by the outside world as "not complete enough", which led to investors' doubts about Binance.
Binance’s net outflows totaled approximately $3.66 billion in the week ending at 10:52 p.m. on December 13, according to data from blockchain analytics firm Nansen. While the above data shows withdrawals of Ethereum and other ERC-20 tokens, approximately 63% of Binance’s assets are on the Ethereum chain, with outflows much higher than other cryptocurrency exchanges.
Binance Netflow 7D ($) -3,660,311,347
8,783,380,428 – Outflow5,123,069,081 – Inflow
Exchange Flows dashboard t.co/CYrBQLryQ0 pic.twitter.com/vV6vcqoWKK
— Nansen (@nansen_ai) December 13, 2022
According to data from research firm CryptoQuant, in terms of cryptocurrency volume, Binance saw a total outflow of 40,353 bitcoins and 278,017 ether coins on Tuesday, both setting daily net outflow records.
In this regard, Binance CEO Changpeng Zhao (CZ) was not afraid at all. He tweeted last night (13th) that:
Binance saw $1.14 billion in net withdrawals “today”, a situation we have experienced before. As a trading platform, single-day net withdrawals or single-day net deposits may occur from time to time, and Binance will continue to operate as usual. In fact, I think it is a good idea to conduct a "withdrawal stress test" on each centralized exchange in turn. Although it will cost some gas fees, it can keep the industry healthy.
Changpeng Zhao published another article today (14th), adding that Binance’s “gold withdrawal tide” seems to have eased, and yesterday’s withdrawal volume was not the highest ever, “not even ranked in the top five.” He pointed out that Binance ranks among LUNA, FTX faced greater demand for withdrawals during the crash, but eventually managed it. Zhao Changpeng also revealed that funds have been seen flowing back into the exchange.
Meanwhile, in response to questions about recent outflows and concerns about transparency, a Binance spokesperson said:
People deposit and withdraw assets every day for a variety of different reasons. Binance’s user assets are backed 1:1 by reserves, and Binance’s capital structure is debt-free. We will continue to top up hot wallet balances to ensure that Binance always has enough funds to meet withdrawal needs.
This article says Binance is not afraid of "$3.6 billion in outflows in a single week"! CZ: "Withdrawal Stress Test" as a tonic first appeared on Blockchain.