Binance Exchange, the largest cryptocurrency exchange by volume in the world started a war with FTX. Yes, we all know that it was in fact a good call. FTX was as big a scam and Larry David found out the hard way. For sure, Sam Bankman-Fried and his team were a bunch of Amphetamine-crazed kids who could have used a bit more bullying in school. All of a sudden, Changpeng Zhao, the CEO of Binance went on a tactical mission carried out via Twitter soldiers against FTX and the rest is history. And now, as Michael Scott in “The Office” would say, well, well, how the turntables!
As SBF is finally under arrest in Bahamas, one has to wonder if his political family has pulled any strings. In fact, one has to wonder if CZ pointing out the evil in FTX can actually mean that Binance Exchange is clear of all malice. Out of nowhere, newly perpetuated FUD is now going around Twitter that Binance may be outgunned in their future battles.
Binance Exchange Outflows
A Few days ago, Reuters revealed insider information that the US Justice Department is likely to charge Binance. According to the report, Binance is under investigation for money laundering and criminal sanctions violations. So naturally, they are torn whether to proceed with these allegations or sign a plea deal with their attorney. So far, it’s all been speculations and rumors. However, the FUD may be carrying a stronger force. After all, these are still buy the rumor and sell the news times in crypto market.
Yesterday, Binance exchange responded to Reuters by stating that they got it wrong. Furthermore, CZ posted a Tweet and said FUD helps us grow. Apparently, using the term “grow” may have been counter intuitive.
In the meantime, Reuters had another article saying Binance exchange has had over $1.9 billion in withdrawals. Let’s put it this way, if yesterday was CZ’s worse day, it would have been his worst day yet!
Today reports indicate that Binance has had over $3 billion in withdrawals in the past seven days. According to crypto data analyzer Nansen, Binance exchange has had $8.78 billion in outflows and $5.12 billion inflows.
The Vibe Check
While CZ is under Federal investigation for potential money laundering allegations, he has said that they are fine. Today, he addressed the withdrawals on Twitter. It would be an understatement to say that he tried to downplay the issue. And in a witty move, CZ pulled an UNO Reverse card by stating that the withdrawals are actually a “stress test” that show how solid their platform is.
“We saw some withdrawals today (net $1.14 billionish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.
I actually think it is a good idea to ‘stress test withdrawals’ on each CEX (centralized exchange) on a rotating basis.
It costs some network fees to run these ‘tests’. But keeps the industry healthy.
Exchange business is simple.”
Centralized exchanges such as Binance have been a hot topic of conversation. Last week, rumors of a possible crypto.com insolvency were all over social media. In case of Binance, they have not been transparent regarding their finances or their proof-of-reserve. So far, Binance exchange is handling all transactions smoothly. But, for an exchange of such scale, $3.6 billion in withdrawals is not considered a serious stress test.
In the meantime, since everyone is attacking everyone, Jesse Powell, the founder of Kraken exchange has also been FUDing around with Binance.
Nonetheless, retail investors keep losing money as they are paying the collateral in this crypto war. Perhaps, the DOJ’s approach to handle Binance is now much more likely to turn violent as the public knows about their allegations.