Binance, the world’s largest cryptocurrency exchange, has seen net withdrawals of over $3 billion in the past day as rumors about alleged problems on the platform spread like wildfire.
According to DeFi TVL aggregator DefiLlama, Binance saw Over $4 billion in withdrawals on Tuesday. Earlier, the exchange saw $1 billion in withdrawals on Monday and Tuesday. As of now, Binance has around $60 billion in assets on its exchange.
A separate tweet from blockchain analytics firm Nansen revealed that Binance saw an outflow of $8.7 billion and an inflow of only $5.1 billion last week, leaving the exchange with a net withdrawal of over $3.6 billion.
The recent withdrawal comes as some crypto experts criticized an audit of Binance, which was conducted by Mazar, and claimed that the exchange’s bitcoin Reserves have 101% collateralization ratio, However, the data essentially shows that 97% of Binance’s bitcoin is collateralized, as revealed by Kraken co-founder Jesse Powell.
“The 3% ‘difference’ is due to BTC lent to clients through margin or loan programs, who may have used tokens outside the scope of the report as collateral. If we take these into account (in other words in, if we don’t provide these BTC loans), we will be 101% collateralized,” a Binance spokesperson tweeted in response.
Powell clearly wasn’t sold. “The big red flag to me is that this seems more of an attempt to prove collateral than to prove reserves,” he said. Told, “They even admit to being insolvent with respect to real assets versus controlled tokens. The ‘collateral’ accounting trick is exactly what FTX played as solvent as well.
In addition, John Reed Stark, former head of the SEC Office of Internet Enforcement and outspoken crypto critic, Told The audit “did not address the effectiveness of internal financial controls.”
Binance’s decision to halt USDC withdrawals added fuel to the fire. The company’s CEO, Changpeng Zhao, said they blocked withdrawals while performing “token swaps,” which could only be completed after banks in New York opened, allowing first BUSD to fiat and then USDC conversion. The platform has since resumed withdrawals.
While some have drawn parallels between Binance and FTX, Nansen CEO Alex Svenvik does not believe the world’s largest crypto exchange is in trouble.
“I would say that you are definitely seeing more withdrawals from Binance than usual. And so it’s definitely worth keeping an eye on, but as far as I can tell at this point, it’s very different from the FTX situation.” Told,
CZ has consistently called the recent situation “FUD,” but said it will help build credibility for the platform. “FUD brought about “stress testing”, which in turn helped build credibility for exchanges that passed the test,” he added. Tweeted,
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