The exchange saw a total net outflow of over $3.6 billion in the past week as crypto firms and users pulled out funds.
Behemoth crypto exchange Binance has seen massive withdrawals in the past week and—on Tuesday—the highest amount of one-day withdrawals since June, Nansen data has revealed.
Binance Customer Withdrawals
Binance’s international arm saw over $8.78 billion leave its exchange and $5.1 billion in incoming funds, meaning the exchange faced a net outflow of roughly $3.66 billion. While such data only refers to Binance’s Ethereum and ERC-20 token movements, approximately 63% of Binance’s portfolio is on Ethereum and the outflows are much larger compared to other crypto exchanges over the same period.
Andrew Thurman, content lead for Nansen, told CNN that at its peak, Binance saw “as high as $3 billion in net outflows” over a 24-hour basis. A report about an ongoing investigation by the US Justice Department into the exchange was a factor in investors’ nervousness, he said.
“Concurrently, a large market maker, Jump, was found to have withdrawn huge sums from Binance with no deposits over the past few weeks — ultimately seems to have caused jitters among both retail and institutional users,” Thurman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.”
Jump Crypto is part of the Jump Trading Group, a quantitative trading firm.
Early Tuesday morning, Zhao explained that USDC withdrawals on Binance US had been temporarily paused due to a token swap issue where the exchange was unable to convert funds due to a New York bank—the liquidity provider for the swap—being closed. The withdrawals have since resumed.
Binance Pauses USDC Withdrawals
Binance, the world’s largest cryptocurrency exchange, said Tuesday it is pausing withdrawals of the stablecoin USDC USDC while it completes a token swap involving the asset.
Withdrawals in other tokens tied to the value of the dollar–specifically tether and BUSD BUSD , a stablecoin developed by Binance and blockchain-focused firm Paxos–are unaffected.
Changpeng Zhao, Binance’s chief executive, added in a Twitter post: “On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in New York in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open.”
Binance CEO says deposits returning to exchange
Deposits are returning and “things seem to have stabilised” at Binance, its chief executive said on Wednesday, a day after it had a sharp increase in withdrawals and paused some stablecoin transactions.
On Tuesday, blockchain data firm Nansen said that Binance had seen withdrawals of $1.9 billion in the last 24 hours and that the exchange said it “temporarily paused” withdrawals of the USDC stablecoin.
“Things seem to have stabilised,” CEO Changpeng Zhao wrote in a tweet. “Yesterday was not the highest withdrawals we processed, not even top 5.”
The $1.9 billion of withdrawals of tokens based on the ethereum blockchain marked the largest daily outflow over a 24-hour period since June 13, the Nansen data showed.
How crypto exchanges such as Binance and its now-bankrupt former rival FTX handle customer deposits is under close scrutiny from users and regulators.
$1.9 billion of withdrawals
The $1.9 billion of withdrawals of tokens based on the ethereum blockchain mark the largest daily outflow over a 24-hour period since June 13, the Nansen data showed, and accounted for the majority of the funds being pulled in the last seven days.
Zhao said on Tuesday swapping USDC with two other tokens – Paxos Standard and Binance USD – requires using traditional dollars at a bank in New York. “The banks are not open for another few hours. We expect the situation will be restored when the banks open.”
USDC, issued by U.S.-based firm Circle, is the world’s second-biggest stablecoin. Dante Disparte, Circle’s chief strategy officer and head of global policy, said that there will be “challenges” relating to liquidity and redemptions when assets are swapped in the way Binance has done with USDC.
“The feature of liquid dollar digital currencies should be that they are redeemable on demand, and at par at all times, even during conditions of stress,” Disparte added.
Binance cryptocurrency exchange
Binance is a cryptocurrency exchange which is the largest exchange in the world in terms of daily trading volume of cryptocurrencies. It was founded in 2017 and is registered in the Cayman Islands.
Binance was founded by Changpeng Zhao, a developer who had previously created high frequency trading software. Binance was initially based in China, but later moved its headquarters out of China shortly before the Chinese government imposed regulations on cryptocurrency trading.
In 2021, Binance was put under investigation by both the United States Department of Justice and Internal Revenue Service on allegations of money laundering and tax offenses. The UK’s Financial Conduct Authority ordered Binance to stop all regulated activity in the United Kingdom in June 2021.
In 2021, Binance shared client data, including names and addresses, with the Russian government.
Binance offers a relatively secure, versatile way to invest in and trade cryptocurrencies. Binance could be overwhelming for beginners and experienced traders alike. Binance offers lower fees than many other cryptocurrency exchanges.
Binance is suitable for experienced investors wanting advanced trading options and plenty of analytics to back up their strategy decisions. Novice users will experience a learning curve, but once you learn your way around, it gets easier.
Bottom line. On what’s probably the single most important feature of an exchange – cost – Binance gets the win. Low trading costs played into Binance being named the best crypto exchange for beginners by Bankrate. However, on the finer details, such as available coins, Coinbase wins outright or has a small advantage.