Key Points
- Binance has seen significant outflows from its platform.
- CEO Changpeng Zhao has argued that the outflows are simply a “stress test” for the company.
- A Forbes analysis shows that the outflow of cash from Binance is worse than Zhao indicated last month.
- Binance and its U.S. arm saw net outflows of $1.43 billion since the SEC lawsuit.
Binance, the leading cryptocurrency exchange globally, has been experiencing a notable surge in the number of users withdrawing their funds from the platform after the Securities and Exchange Commission (SEC) filed a lawsuit against the company and its CEO, Changpeng Zhao. Despite the setback, Zhao has come forward to express his optimism, claiming that the outflows could be viewed as a “stress test” for the exchange.
According to our data, last 24hrs, @Binance net outflow is about $392m.
Our wallet addresses are public. Some 3rd party analytics measure Change in AUM (asset under management) in USD equivalent as outflow. This would include crypto price drops (which decrease AUM) as “outflow”.…
— CZ 🔶 Binance (@cz_binance) June 10, 2023
Binance Facing Massive Outflows
On June 6, 2023, the SEC filed a lawsuit against Binance and its founder, Zhao, alleging that the company had been engaging in the unregistered offer and sale of securities, among other charges. This news sent shockwaves through the cryptocurrency world, and investors quickly began withdrawing their funds from Binance.
According to crypto research firm Nansen, a staggering $790 million was withdrawn in just 24 hours.The outflows didn’t stop there. In the days that followed, Binance and its U.S. arm saw net outflows totaling $1.43 billion since the SEC lawsuit was filed. Zhao has tried to downplay the situation, calling it a “stress test” for the company, but the continued outflows and a Forbes analysis suggest that things may be more serious than he’s letting on.
Netflow to Binance over the past 24 hours is $778.6M negative on Ethereum – $871.7M in and $1.65B out
Over the past hour, netflow on Ethereum continues to be negative at $35.7M on Ethereum – $14.8M in and $50.5M out
Track it here https://t.co/nwTgpXWhZY and filter for “Binance” pic.twitter.com/jnNAN0QKVy
— Nansen 🧭 (@nansen_ai) June 6, 2023
Analytics Firms Promoting Skewed Data?
Binance CEO Changpeng Zhao has pushed back against reports of a significant outflow of crypto assets from the exchange. He argues that third-party analytics may be skewing the data. While analytics platforms such as Nansen and DeFiLlama have reported increased outflows from Binance following the SEC lawsuit against the firm, CZ claims that the outflow over the past 24 hours was around $392 million.
According to CZ, large inflows and outflows are normal during times of volatility. He also notes that some third-party analytics measure changes in assets under management as “outflow.” This can include times when crypto prices decline. In the wake of the SEC’s attacks on Coinbase and Binance, crypto market capitalization has declined by 7%, according to CoinGecko.
Binance Vs SEC Fiasco
Earlier, the U.S. Securities and Exchange Commission had made a move against Binance, its CEO Changpeng Zhao, and Binance.US, alleging that they have created a “web of deception” to avoid U.S. laws. The SEC has brought forth 13 charges against Binance, accusing the company of falsely inflating its trading volumes, redirecting customer funds, failing to limit U.S. customers from its platform, and deceiving investors about its market surveillance controls.
Binance has been in the spotlight lately due to the Securities and Exchange Commission’s investigations. The company has been forthcoming about its cooperation with the SEC and has made significant efforts to address their concerns and answer their inquiries. In fact, Binance has even attempted to negotiate a settlement with the regulatory body. However, in a blog post, Binance has also made it clear that it will defend its platform vigorously.
End Note:
Recent developments have caused a stir in the world of cryptocurrency, particularly with regards to Binance. The platform has been experiencing a notable surge in outflows following the SEC’s lawsuit against the company and its CEO, Changpeng Zhao. Despite Zhao’s assurances that the situation is not as dire as it appears, the steady stream of outflows and scrutiny from both users and regulators indicate that Binance’s financial stability is being closely monitored. The question on everyone’s mind now is how the company will navigate this latest challenge. Only time will tell.
