Binance registers $1.9 billion in withdrawals in only 24 hours

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Binance, the world’s leading cryptocurrency exchange by volume, recently saw a massive surge in withdrawals, leading to $1.9 billion of withdrawals in only 24 hours. The information was shared by a blockchain data company Nansen on Tuesday, December 13th. The surge in withdrawals was then followed by Binance’s decision to temporarily pause withdrawals of the Circle-issued stablecoin, USD Coin (USDC).

Binance shares proof-of-reserves

The way that major exchanges such as Binance are handling users’ deposits has always been questionable and under close scrutiny by both their users, as well as regulators. The same is true when it comes to FTX, a formerly popular and now bankrupt crypto exchange from the Bahamas.

While FTX used to be Binance’s largest rival, its collapse has left Binance unopposed, allowing it to cement its position as the most dominant crypto platform in the world. Last week, the exchange shared a proof-of-reserves report issued by a company called Mazars after it conducted an audit. According to the report, Binance’s holdings of Bitcoin (BTC) is greater than the customer deposits on a specific day in November.

Now, the exchange saw $1.9 billion in withdrawals of Ethereum-based USDC, which marks the largest outflow of funds in a single day that the exchange has seen since June 13th. However, this was not an isolated event, and Binance has been seeing withdrawals for days, leading to the majority of the money held on the platform now being pulled from it in a single week.

Nansen spokesperson noted that this kind of development came amid growing uncertainty, as the exchange was expecting a reserves report. However, the community potentially expected that the report would reveal that there are not enough funds for everyone to make a withdrawal, hence the rush to do it before others did it first.

Major withdrawals are “business as usual for Binance,” says CZ

The platform’s CEO, Changpeng Zhao, commented that sudden major withdrawals are nothing new for the exchange. Binance has been around for long enough, in good times and bad, to see it all before. Sometimes, there are massive withdrawals, followed by massive deposits. However, every exchange’s official and spokesperson continues to insist that there is more than enough funds to meet the needs and requests of all users.

Binance claims that all funds are backed 1:1 and that its capital structure remains free of debt. As for USDC withdrawals, the spokesperson noted that the exchange certainly has enough, although the assets are stored in cold storages for their safety, and Binance might have to move them to hot wallets in order to make the funds available. Following the pause of USDC withdrawals, the exchange re-enabled them at 16:54 GMT.

Previously, the exchange also noted in September that it would convert user balances and deposits of USD Coin and two other stablecoins into its own native stablecoin, BUSD.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.