Binance Suffers $1 Billion Exit in One Day as Crypto Jitters Spread

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Investors have withdrawn more than $1 billion from Binance as the world’s largest cryptocurrency exchange battles a crisis of confidence in digital tokens and fears it could also be dragged into US investigations.

Changpeng Zhao, chief executive of Binance, said the exchange saw $1.14 billion in net withdrawals on Tuesday as users continued to withdraw their assets from its market.

Seven-day net withdrawals had exceeded $3.6 billion, according to an analysis conducted by blockchain research group Nansen.

The releases underscored the nervousness swirling around crypto markets since last month, the month of the collapse of FTX, one of the biggest companies in the industry. FTX founder Sam Bankman-Fried was charged with fraud in the United States on Tuesday.

Nansen said the rapid withdrawals were the largest since June, when the digital asset market was dragged into an unprecedented stock market crash that saw the value of popular tokens plummet.

Zhao downplayed the magnitude of these takeovers, insisting it was business as usual for us. On some days we have net withdrawals; some days we have net deposits, Zhao said on Twitter.

Investors have withdrawn bitcoin from crypto exchanges at record levels over the past month due to concerns about the safety of their assets. Crypto exchanges such as Binance take custody of client assets while providing a venue for trading.

Binance said it has more than $60 billion in assets, enough funds to honor withdrawals. However, the company’s disclosures do not include its liabilities, making it difficult to determine its financial health. The exchange told the FT that all customer deposits were backed by matching assets and that its capital structure was debt-free.

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Concerns about Binance intensified this week after a Reuters report on Monday that Binance was under criminal investigation in the United States for its handling of U.S. money laundering and sanctions laws. Binance said it would not be appropriate to comment on a US investigation.

Regulators conduct a thorough review of every crypto firm against many of the same issues. This fledgling industry has grown rapidly and Binance has shown its commitment to security and compliance, the company said. Earlier this week, he said he had responded to more than 47,000 law enforcement requests over the past year.

The exchange said on Tuesday that it has temporarily suspended withdrawals from USDC, a crypto token that matches the value of the US dollar, while it conducts a token swap involving the coin. It then restarted withdrawals while other so-called stablecoins that track the dollar were unaffected, he added.

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