Investors Pull $3B From Binance Over Crypto Unease

Investors withdrew $3 billion from Binance Tuesday (Dec. 13) over worries about the crypto industry.

Chanpeng Zhao, the cryptocurrency firm’s chief executive, had initially written on Twitter Tuesday that the exchange had seen $1.14 billion in net withdrawals.

Blockchain analytics company Nansen put the number at as high as $3 billion, CNN reported early Wednesday (Dec. 14).

Andrew Thurman, content lead for Nansen, told the network that reports about a U.S. Justice Department investigation into Binance helped fuel investor unease.

“Concurrently, a large market-maker, Jump, was found to have withdrawn huge sums from Binance with no deposits over the past few weeks — ultimately seems to have caused jitters among both retail and institutional users,” Thurman said. “In short, it’s a lot of money headed out, and that’s spooked some folks.”

Zhao downplayed Tuesday’s events on Twitter early Wednesday and said the situation appeared to have stabilized.

“Yesterday was not the highest withdrawals we processed, not even top 5,” he wrote. “We processed more during LUNA or FTX crashes. Now deposits are coming back in.”

Tuesday also saw Binance pause USDC withdrawals after seeing a heightened level of customers withdrawing the stablecoin.

As reported this weekend, Binance and other companies have also seen record numbers of investors withdrawing bitcoin following the collapse of the FTX exchange. Investors reportedly pulled 91,363 bitcoin, worth almost $1.5 billion, from exchanges including Binance, Kraken, and Coinbase. It was the largest bitcoin outflow on record.

Binance, PYMNTS wrote Tuesday, saw its market leadership further cemented by the fall of FTX, and now finds itself under pressure from authorities over its compliance with U.S. anti-money laundering laws.

“Binance’s attempt to show a ‘proof-of-reserves’  report in order to shore up confidence recently backfired, as even the auditors who worked on it have since distanced themselves from any broader implications being drawn from the narrow scope of their findings,” PYMNTS wrote.

The report from international auditing firm Mazars focused just on Binance’s bitcoin holdings and liabilities and did not expand to the other cryptocurrencies held and traded on Binance.

“Had we performed additional procedures, other matters might have come to our attention that would have been reported,” the auditors said in their statement.