Binance, the largest cryptocurrency exchange by market volume, had lost over 12 billion dollars in the aftermath of the FTX collapse
Things get worse for Binance when it had to face over $1.9 billion in withdrawals within 24 hours
The founder of Binance said that Binance is 100% liquid and all users can withdraw 100% of their funds
The FTT-Alameda crash, many projects including Solana, Genesis, and Crypto.com had to suffer contagion from the fall. However, those who burnt the village burned their hands as well.
Binance, the largest cryptocurrency exchange by market volume, had lost over 12 billion dollars in the aftermath of the FTX collapse. Even though Changpeng Zhao declared mass withdrawals from Binance as a litmus test for its credibility, the situation has gone worse since then. According to the reports by Defillama, Binance had to face a whopping $300 million+ in withdrawals last Friday with constantly increasing outflows from the exchange.
The sudden collapse of the FTX exchange led to utter FUD in the crypto industry. All the crypto investors who had their crypto stored in a centralized exchange started to move their assets into cold wallets or liquidate them from the exchanges. Even though exchanges such as Binance came forward with their Prood-of-Reserve reports, nothing could break the mass outflow.
Things get worse for Binance when it had to face over $1.9 billion in withdrawals within 24 hours. This was the highest withdrawal that the exchange had to face in a single day. Apart from that, Binance never released its proof-of-liabilities records and moved billions of dollars out of their proof-of-reserve wallets within days of its release.
All this information in highly volatile market conditions was enough to create utter chaos in the industry and the outflows continued. Changping Zhao, CEO, and Founder of Binance, constantly said that Binance is 100% liquid and all users can withdraw 100% of their funds and it seemed that his customers took him extra seriously.
Since then, Binance’s total customer funds have reduced by $12 billion which is more than the total customer holdings of other prominent crypto exchanges. Apart from that, Binance’s native token BNB also fell by 29%, and the net assets dropped by 24%.
It is true that investors are not willing to keep their assets in a centralized exchange and want to have custody of their cryptocurrencies. Other than that, a massive shift from centralized exchange to decentralized exchange has also been noticed in the recent past.
This indicates the increasing need for decentralized mediums in the crypto industry that are trustless, and do not hold your crypto funds. The trend of decentralization is not good for centralized conglomerates such as Binance. The withdrawals are expected to some more time and if Binance is 100% liquid, there would be no need for either investors or Binance to be worried.
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