At the beginning of this week it came to light that crypto investors were withdrawing their money from Binance en masse. There were rumors about whether the company was handling customer money reliably, which could lead it to suffer the same fate as the now-bankrupt competitor FTX. Fortunately, the situation now seems to be somewhat under control. The’outflows‘ are starting to decrease.
Lots of fear Binance customers
To reassure customers, Binance audits of the bitcoins it manages for customers. But it was discovered late last week that Binance is using some of these funds to provide leverage to other traders so they can trade with debt. This would effectively leave it with a gap in the balance of about 4%. Users’ money may not be that safe at all because of this.
As a result, customers massively withdrew their money from Binance, fearing that a possible bankruptcy of Binance would cause even more problems than that of FTX. Within 24 hours, the company saw $902 million evaporate. Not much later, it even went to $ 1.6 billion, and that was exclusively about outflows on the Ethereum network. Outflows to other networks and bank accounts are therefore added.
At the time, Binance had approximately $64 billion under its care, and it is also the largest crypto exchange in the world in terms of volume. So the company is very important.
Panic at Binance is already diminishing
But now the fear is starting to diminish, according to on-chain data Bloomberg has viewed. Data from blockchain analytics firm Nansen shows that $239 million has left in the past 24 hours, according to Bloomberg. That’s less than last week’s average, which was $272 million. Admittedly, it is still a contraction for Binance, but it is a tapering decline. That’s a positive sign.
The American business newspaper also repeats something that on-chain information from CryptoQuant also emphasized. The amount that has left the crypto exchange in various ways is still minuscule in relative terms. In total, there are many more assets lying around, and not as many unexplained things happen as with FTX. Perhaps the end of the chaos is in sight.