Binance withdrawals surge to $3 billion, CEO CZ calls its ‘business as usual’

A deja-vu in the crypto industry.
Ameya Paleja
Changpeng Zhao, Co-Founder & CEO, Binance
Changpeng Zhao, Co-Founder & CEO, Binance

Ben McShane / Getty 

Withdrawals at the world's largest crypto exchange platform, Binance, surged to $3 billion in a period of 24 hours, according to blockchain analytics firm Nansen.

Binance CEO Changpeng Zhao called the incident "very normal market behavior, " CNN reported.

The turn of events is quite similar to Binance's former rival crypto exchange, FTX, which crashed and burned after investors began taking out money from the exchange. As FTX's former CEO, Sam Bankman-Fried (SBF), is charged with fraud, the attention of the U.S. regulators appears to be on other crypto exchanges, and Binance is the biggest of them all.

Rise and fall of the crypto empire

An unregulated sector, cryptocurrency markets saw a meteoric rise during the pandemic years as the global economy came to a grinding halt. With the world going back to the previous normal this year, the interest in cryptocurrencies has dropped, and coin valuations have been reduced to less than 60 percent of their all-time highs.

The world's most popular cryptocurrency, is now trading below $18,000, a far cry from the $64,000 peak it saw just a year ago. The crypto markets were already preparing for a rough winter ahead when the collapse of FTX unfolded, and prosecutors in the U.S. were looking at other crypto companies, too, even as they tighten the screws on SBF's trial.

Binance under the lens

Unidentified sources told Reuters that prosecutors were investigating a money laundering investigation against Binance and CEO Changpeng Zhao (popularly known as CZ), and other executives could face criminal charges.

According to Futurism, Binance halted the withdrawals of the stablecoin USDC, pegged to the U.S. dollar, for about eight hours on Tuesday to initiate a token swap. The news worried investors, who, led by the quantitative trading firm, Jump Crypto, made large withdrawals totaling $3 billion in net outflows over 24 hours from Binance.

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Speaking at a Twitter Spaces event, CZ told the audience that Binance, which saw over $1.1 billion in withdrawals at one point, had seen worse days before. Comparing the collapse of FTX to one of a bank, CZ said, "if you get hurt by one bank, you’re going to think all the other banks are bad; the fact is just because one bank is bad doesn’t mean all the other banks are bad," CNN said in its report.

Calling the withdrawals "very normal market behavior" CZ added on Twitter Spaces that the company was seeing money flowing back already.

Later, the analytics firm Nansen also tweeted Binance's stablecoin holdings in a publicly disclosed address.

Although the news refreshes memories of how the FTX collapse came about, Binance is confident that it will come through the sweeping review that crypto companies are going through.

In fact, Binance has been calling for greater regulation of the industry and CZ even suggested carrying out stress test withdrawals on crypto exchanges on a rotating basis to keep the crypto industry healthy.