Deposits “come back” but the road is “bumpy”

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Binance CEO Changpeng Zhao said on Wednesday that the situation had “stabilized” on his cryptocurrency exchange, in a bid to allay investor fears after the company was forced to halt withdrawals of a stablecoin.

Zhao said about $1.14 billion in net withdrawals took place on Tuesday, but tweeted that it was “not the highest withdrawals we’ve processed, not even the best.” [five].” The CEO said the deposits go to Binance.

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His comments come after Binance temporarily halted withdrawals from the USDC stablecoin on Tuesday as it conducted a “token swap.” Zhao said Binance has seen an increase in USDC withdrawals. The suspension of withdrawals was because some currency swaps had to be routed through an unspecified bank in New York that was not open, according to Zhao. Binance resumed withdrawals after about eight hours of hiatus.

The episode left investors jittery, especially after the collapse of crypto exchange FTX and the subsequent arrest of its founder Sam Bankman-Fried, who faces federal criminal charges.

Blockchain analytics firm Nansen said on Tuesday that there have been more than $3 billion in net withdrawals from Binance in the past seven days. But Nansen CEO Alex Svanevik said the situation was different from FTX, which saw withdrawals to the tune of “several billion dollars”.

“I would say you are definitely seeing larger than normal drawdowns from Binance. And so it’s definitely worth keeping an eye on, but as far as I know at this point it’s very different from the FTX situation” Svanevik told CNBC’s “Capital Connection” on Wednesday.

Svanevik noted that Binance has around $60 billion in assets on its exchange, of which withdrawals represent a small proportion.

Binance’s Zhao also tried to project a sense of strength internally at Binance.

“While we expect the next few months to be bumpy, we will overcome this difficult time and be stronger for getting through it,” Zhao wrote in an internal memo, seen by Bloomberg.

Investors have called for more transparency in Binance’s activities. Last month, the company released proof of reserve in which it claims to have a reserve rate of 101%. This means that it has enough assets to cover customer deposits.

But critics said the proof of reservations didn’t go far enough to give assurances about Binance’s guarantee. Mazars, the auditing firm used by Binance for its reserve evidence, said in its five-page November report that the company “expresses no opinion or conclusion of assurance.”

Zhao said in a Twitter conference on Wednesday that he holds individual user asset pools. He also said the company will be releasing another batch of proof of reserves in the “next two [of] weeks.”

A Binance spokesperson was not immediately available for comment when contacted about the contents of this memo and criticism of the company’s proof of reserves.

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