Concerns surrounding the condition of Binance’s reserves have prompted a steady influx of withdrawals from the cryptocurrency exchange.
According to statistics released by the cryptocurrency analytical site Nansen, on December 12 the exchange saw its greatest day withdrawals since June, surpassing rival trading platforms with nearly $2 billion in net outflows.
A few weeks after the FTX collapse, investors are still anxious about the condition of their cryptocurrency exchange assets, as seen by the high value of withdrawals. Indeed, the circumstance compelled exchanges to provide evidence of their reserves in order to earn investor trust.
Notably, Binance revealed that its Bitcoin (BTC) reserves are overcollateralized. However, the document has been examined by specialists who have pointed out that the reserves are limited in scope.
Uncertainty increased as Binance CEO Changpeng Zhao declared the exchange will temporarily suspend USD Coin (USDC) withdrawals, citing a token swap problem.
“The number of people cashing out their USDC has risen. To convert PAX/BUSD to USDC you must go via a New York bank in USD. The banks will not open for many more hours. We anticipate that the problem will be rectified when the banks reopen,” added Zhao.
As a result of the FTX crash and the subsequent arrest of creator Sam Bankman-Fried, the cryptocurrency market has been on edge. There has been widespread concern that the repercussions from FTX might extend to the rest of the market, which has contributed in part to the withdrawals.
The withdrawals come as rumours of a potential criminal prosecution of Binance by United States officials circulate, adding to worries over the exchange’s reserves. According to Finbold, the Department of Justice is divided on whether or not to prosecute Binance with breaches of unlicensed money transfer, money laundering conspiracy, and criminal penalties.
The event caused the Binance native token BNB to briefly decline. At the time of publication, the token was exchanging hands at $278, a rise of less than 1% in the previous twenty-four hours.
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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