Binance Holdings Ltd., the world’s largest cryptocurrency exchange, has seen an increase in asset withdrawals as traders seek to retain control of their tokens following rumors that rival FTX may have stolen customer funds before shutting down in November.
According to data from research firm Nansen, as of 9:20 a.m. (BST), net outflows of digital tokens from Binance totaled approximately $3.7 billion in the previous week, including nearly $2 billion in the last 24 hours. The one-day figure was almost 18 times greater than the next-largest outflow on Bitfinex.
Exchange outflows are being scrutinized against the backdrop of concern that more dominoes may fall in the crypto sector in the aftermath of FTX’s bankruptcy and the arrest of its founder, Sam Bankman-Fried (SBF), on Monday. There were rumours that SBF mishandled customer funds, which led to the collapse of his empire and a loss of trust in the industry.
Alex Svanevik, Nansen’s CEO, said, “The flows are still relatively small considering Binance’s reserves. But given everything that’s happened, it’s not surprising many are choosing a cautious approach.”
Binance’s Efforts to Mitigate the Impact of FUD
Binance and its CEO, Changpeng Zhao, have worked tirelessly to combat any attempts to cloak the company in FUD, cryptocurrency jargon for fear, uncertainty, and doubt. One aspect of this is an attempt to reassure the public about the state of its reserves.
In a blog post published in November, Binance revealed details of digital-asset wallet addresses containing tokens worth approximately $69 billion.
Last week, the exchange published a Proof-of-Reserve report. A snapshot review by Mazars (an accounting firm) reveals that Binance has enough cryptocurrencies to balance all its liabilities.
However, the report admits to some flaws, such as the lack of a real audit of Binance’s financial statements, which would have provided a complete picture of the company’s overall financial health.
Binance Remains the Largest Cryptocurrency Exchange Regardless of Market Conditions
Binance still retains its position as the largest cryptocurrency exchange in the aftermath of FTX’s November 11 bankruptcy. In the first week of December, its daily average trading volume was more than eight times that of runner-up Coinbase Global Inc. The comparable figure in the final week of October was roughly seven times higher.
Customers withdrawing their crypto assets have had a minor impact on Coinbase, which has seen a $546 million net outflow in the last week and a small inflow over the last 24 hours.
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