Binance Confirms Debt-Free Status To Reassure Users After Massive Asset Withdrawals

The US Department of Justice announced on Monday that it is investigating Binance for money laundering and criminal sanctions violations. This created negative sentiment among the exchange’s users, resulting in a surge in crypto asset withdrawals.  

BBN Bloomberg reached out to Binance for comments on the matter. 

The company’s spokesperson replied via email, saying:

“People deposit and withdraw assets everyday for a variety of different reasons. User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free……We maintain hot wallet balances to ensure that we always have more than enough funds to fulfil withdrawal requests and we top up hot wallet balances accordingly.”

Binance CEO Changpeng Zhao also issued a statement on Twitter. 

He said:

“We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us. I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. It costs some network fees to run these “tests”. But keeps the industry healthy.” 

Changpeng tweeted that things have stabilized, and new deposits are already coming in. He also stated that yesterday’s withdrawals were not the largest and that the exchange processed more during the FTX and LUNA crashes.  

Mazars, a South African auditing firm, published a report on Binance’s Proof-of-Reserves on December 7, 2022. According to the report, the company has over 575,742.42 BTC worth $9.7 billion and is 101% collateralized. The exchange is working closely with Mazars to ensure greater transparency and will release more relevant financial information to the public when ready to.

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