Binance has recorded massive withdrawals in the last seven days sparking concerns over the future of the exchange.
- The exchange saw $8.6 billion leave its platform and only a $5.1 billion inflow leading to a $3.6 billion deficit.
- Binance CEO Changpeng Zhao has played off fears describing it as a “business as usual” with some bad days and good days.
Sequel to the collapse of FTX, panic has ravaged the industry, with investors more sceptical than ever about centralized exchanges and service providers.
Although Binance has enjoyed the trust of millions of users since its launch, a lot may be changing in recent weeks. Binance has recorded huge withdrawals, most of which have come in the past seven days totalling up to $8.6 billion.
According to blockchain data analytics firm Nansen, the firm recorded the highest amount of daily withdrawals since June on Tuesday, pushing up the weekly figure to $8.6 billion. Amidst increasing withdrawals, the exchange had an inflow of $5.1 billion, leaving it with a net outflow of $3.6 billion.
Binance withdrawal figures topped other centralized exchanges (CEXs), including Coinbase and Binance US, which both had net outflows of about $800 million and $38.7 million respectively. Crypto firms like JumpCrypto among others lead the pack in making the highest withdrawals on Binance. In two weeks, the firm has taken off $141 million from Binance’s balance sheet.
Despite this ugly trend, Zhao has played down the fears of users describing the incident as “business as usual.”
“We saw some withdrawals today. I actually think it is a good idea to ‘stress test withdrawals’ on each CEX on a rotating basis.”
In the midst of record withdrawals, Binance still holds assets worth over $58 billion, signalling a strong financial base for the exchange.
More fear mounts as USDC withdrawal halted
On Tuesday, Binance temporarily halted withdrawals of USD Coin (USDC), with Zhao citing “token swap issues.” Recall that Binance announced a token swap policy in September, which will see USDC and two other stablecoins converted to BUSD.
The initial halt raised a lot of eyebrows and tension, with the CEO explaining that they received an increase in USDC withdrawals and the banks were not open for two hours of the halt because swapping tokens requires traditional fiat at the bank.
Withdrawals of USDC have resumed on the exchange, with the company giving an assurance that funds are backed 1:1.