by
Hong Kong
Cnn
—
Investors withdrew up to $3 billion from Binance on Tuesday, according to blockchain analytics firm Nansen, as the world’s largest cryptocurrency the exchange faced investor jitters amid a deluge of negative headlines about the sector.
Andrew Thurman, head of content for Nansen, told CNN that at its peak, Binance had “up to $3 billion in net outflows” in a 24-hour span. A report about an ongoing investigation by the US Department of Justice into the exchange has been a factor in investor jitters, he said.
“At the same time, a large market maker, Jump, was found to have been withdrawing large sums from Binance without deposits in recent weeks – ultimately appearing to have caused jitters among both retail and institutional users,” Thurman said. “In short, a lot of money was spent, and that scared some people.”
Jump Crypto is part of the Jump Trading Group, a quantitative trading firm.
On Tuesday, Binance already saw its “highest daily withdrawals since June,” according to Nansen’s analysis. The withdrawal rate has since stabilized at about $79 million in net outflows, the company’s data shows as of Tuesday evening ET.
Sector investors, already grappling with the “cryptocurrency winter” triggered by the collapse of Terraform Labs in May, are facing a major blow from the fall of cryptocurrency exchange FTX, which filed for bankruptcy in November. Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas this week after US prosecutors filed criminal charges against him.
Binance was also in the headlines. On Monday, Reuters reported, citing unidentified sources, that US prosecutors were considering wrapping up a money laundering investigation into Binance “by filing criminal charges against individual executives, including founder Changpeng Zhao.”
The US Department of Justice did not immediately respond to a request for comment outside US business hours.
In a statement to CNN, Binance said that “as has been widely reported, regulators are carrying out an extensive review of every cryptocurrency company.”
“This fledgling industry has grown rapidly, and Binance has demonstrated its commitment to security and compliance through large investments in our team, as well as the tools and technology we use to detect and deter illegal activity,” a spokesperson added.
Zhao acknowledged the runoff situation on Tuesday, tweet that Binance had at one point seen “some withdrawals” of around $1.1 billion.
“We’ve seen it before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us,” she wrote.
In his Twitter post, the billionaire tried to strike an upbeat note, suggesting that it was “a good idea” for every cryptocurrency exchange to generally face “stress test withdrawals.” Him later added Outflows that Tuesday weren’t among the highest the company had processed.
In a statement to CNN, Binance added, “User assets on Binance are all secured 1:1, and Binance’s capital structure is debt-free.”
Binance had initially offered to help rescue smaller rival FTX, before pulling out of the deal last month.
Bankman-Fried was indicted in the United States on Tuesday on eight felony charges, including wire fraud and conspiracy. Separately, US market regulators also accused Bankman-Fried of defrauding investors and clients.
Known as “SBF,” Bankman-Fried is a crypto celebrity who became an overnight pariah when his company suffered a cash crunch and filed for bankruptcy last month, leaving at least a million depositors in the bank. ‘inability to access your funds.
— Matt Egan and Allison Morrow of CNN contributed to this report.
