Dec 15, 2022 at 06:10The crypto market has been hit with a lot of negative news related to Binance over the past few days. The exchange is experiencing a run-in of its frightened users who are withdrawing billions of dollars from their accounts. The CEO of Binance has also stated that times are difficult for the exchange. Gather all the details about what’s going on around Binance right now.
The highlights
A huge amount of negative information (FUD) has been generated around Binance in recent days, the following main events can be highlighted:
- According to insider reports, total withdrawals from the world’s first crypto exchange totaled more than $6 billion in the last 72 hours. According to CNN Business, users withdrew $1 billion from the crypto exchange’s deposits in the last 24 hours, according to Nansen the outflow during this time is even more — $3 billion. Whether the exchange will be able to continue such a high rate of liquidity loss is a very big question. The situation is assessed by many analysts as very dangerous.
- The exchange may be prosecuted by the U.S. at any time. We have already written that according to insiders the investigation is completed and the U.S. government agencies are trying to come to a general consensus on the way forward.
- Over the last two months, more than 10 top managers of Binance resigned at their own will which indirectly confirms the unhealthy situation inside the exchange.
Against this background, the CEO of Binance addressed an internal newsletter to his staff to warn them of the “difficult times.” He added that the entire crypto industry is “going through a historic moment.”
Binance has had the highest daily withdrawals since June, with over $2B* in net outflows since Dec 12
*ETH & ERC20 tokens only pic.twitter.com/xZNdZxRCVy
— Nansen 🧭 (@nansen_ai) December 13, 2022
The brand new newsletter with insights, market analysis and daily opportunities.
Let’s grow together!
For those interested in the details
The collapse of rival exchange FTX last month made investors nervous because of fears of infection spreading throughout the crypto industry. Former FTX CEO Sam Bankman-Fried was arrested in the Bahamas late Monday night after U.S. prosecutors filed criminal charges.
Concerns about Binance have also increased in recent weeks in the cryptocurrency community. In an effort to reassure customers that their assets are safeguarded, the exchange released its first reserve review report, an audit aimed at making sure the platform has enough assets to cover all of its customer balances.
Talking live on @CNBC, @cz_binance :
> Reiterates no amount of withdrawals can cause issues for @binance
> This is majorly different than fractional reserve banking, Binance holds assets 1:1.
> Confirms $USDC issue was from the bank-conversion channel and work hours👇 pic.twitter.com/RQTCPQXbsg— CryptoPotato Official (@Crypto_Potato) December 15, 2022
However, the format of the report raised more questions than answers for analysts. Former SEC regulator John Stark told that Binance’s report did not address internal financial controls and lacked a “credibility opinion.”
In addition, Reuters reported Monday that some U.S. prosecutors involved in the four-year investigation into Binance believe there is enough evidence to bring criminal charges against individual exchange executives, including CZ.
#Binance has processed $6 bil in withdrawals in the past 24h.
They also processed $6 bil in deposits from their wallets to pay everyone. #FTX was already insolvent after the first few billions.
This is a good stress test. Only the best survive a bear market. pic.twitter.com/xVyXyjjLnk
— Duo Nine ⚡ YCC (@DU09BTC) December 14, 2022
Analysts also drew attention to the lack of transparency in the corporate structure, which is undergoing a permanent reorganization. The firing of top managers and complaints from ordinary employees of the exchange, we have heard it all from the news.
In case the rush of withdrawals from Binance will continue, the withdrawals may stop sooner or later. If Binance manages to survive such a mass rush of users, it will be incredible luck for the exchange. If Binance fails to withstand the pressure of mass FUD, the consequences will be catastrophic for the entire crypto industry.
Things seem to have stabilized. Yesterday was not the highest withdrawals we processed, not even top 5. We processed more during LUNA or FTX crashes. Now deposits are coming back in. 🤷♂️💪 https://t.co/WLK2KyCym0
— CZ 🔶 BNB (@cz_binance) December 14, 2022
How can I make money on this?
Right now, playing on the sentiment of the market, many players are trying to short BNB, which falls on this negative news. But you have to keep in mind that you can do it only for a short time and very carefully.
Also, you can try to buy back the dip, if you think that BNB is valuable and you believe in the future of Binance. However, it is impossible to foresee all the force majeure, so act at your own risk.
9
