Crypto investors withdrew $1.6 billion from Binance over fear the crypto exchange may be the ‘next shoe to drop’
Crypto investors withdrew $1.6 billion from Binance in just 48 hours after the world’s largest crypto exchange and its founder were sued by the U.S. Commodity Futures Trading Commission (CFTC) for operating what the regulator alleged were an “illegal” exchange and a “sham” compliance program.
According to data from the blockchain data tracker Nansen, Binance has seen $1.6 billion of overall withdrawals since the lawsuit was filed and $852 million in the last 24 hours alone. The withdrawals were a step up from the average of $385 million per day the crypto exchange has experienced over the last two weeks.
CFTC said it’s seeking “disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations, as charged.”
As you may recall, early this month, investors withdrew about $6 billion from Binance’s stablecoin after the US crackdown on the exchange. According to the data from market tracker CoinGecko, Binance’s stablecoin, Binance USD, saw around $6 billion of outflows following a U.S. regulatory crackdown on the company that issues the token.
Meanwhile, Martin Lee, a research analyst at Nansen, added that the current outflows were higher than usual, but still far off from a record high of December 13, when investors pulled $3 billion from Binance as they grew weary about the state of Binance’s reserves.
The withdrawals further reinforce the lack of investors’ faith in crypto exchanges amid the ongoing chaos in the industry. The collapse of Terra Luna and San Bankman-Fried crypto exchange FTX continues to ripple across the crypto market. Is Binance next?
Founded in 2017 by Changpeng Zhao and Yi He, the Cayman Islands-based Binance is the world’s largest crypto exchange. It provides a platform for trading various cryptocurrencies. Binance also provides access to exchange digital currency pairs on the market while maintaining security, and liquidity, enabling a safe and efficient deal with anyone, anytime and anywhere.
Before founding Binance, CEO Changpeng Zhao previously founded Fusion Systems in 2005 in Shanghai; the company that built high-frequency trading systems for brokers. In 2013 he joined Blockchain.info as the third member of the cryptocurrency wallet’s team. He also worked at OKCoin as CTO for less than a year, a platform for spot trading between fiat and digital assets.