Binance Sees Net Outflows of $2.1 Billion Amid Challenges

Binance has reportedly experienced net outflows of $2.1 billion over what’s been a challenging week.

The cryptocurrency exchange has seen these withdrawals during a seven-day period in which it announced it would end its offer of charging no fees on spot bitcoin trading, it encountered a software error that forced it to temporarily pause spot trading, and it was sued by the Commodity Futures Trading Commission (CFTC), The Wall Street Journal (WSJ) reported Tuesday (March 28).

The withdrawals accelerated after the announcement of the CFTC lawsuit, according to the report.

Reached for comment by PYMNTS, a Binance spokesperson pointed to the company’s statement released Monday (March 28) about the suit.

The CFTC charged the company and CEO Changpeng Zhao with violating U.S. regulations, specifically the Commodity Exchange Act and CFTC regulations.

In its statement responding to the charges, Binance said it has been working collaboratively with the CFTC for two years, that it finds the filing “unexpected and disappointing,” and that it will continue to collaborate with regulators in the U.S. and around the world.

While outflows increased after the CFTC’s announcement, the acceleration was not as dramatic as that seen in February, when the New York Department of Financial Services banned the issuance of BUSD, a Binance-branded stablecoin, according to the WSJ report.

After the week’s net outflows of $2.1 billion, Binance still has $63.2 billion in its publicly disclosed wallets, the report said.

The crypto exchange’s most recent challenges came at a time when investors are already watching to see if other regulators or law enforcement officials take action against Binance in the U.S. or in other countries. Others are concerned about a bank run like the one that took down the company’s former competitor, the now-bankrupt FTX, per the report.

The CFTC charges against Binance delivered another blow against investor confidence in the cryptocurrency world that was already shaken by other regulatory actions and an expectation that crypto regulation will be developed in the courts rather than in the legislature, Seeking Alpha reported Monday.

In a separate report Monday, Seeking Alpha said that when Binance stopped most zero-fee trading, the trading volume on the platform sank to its lowest level over the weekend since 2022.