Is Binance Solvent? Crypto Twitter is Starting to Panic
Some of the crypto community’s biggest voices are worried that Binance, the world’s largest crypto exchange, is in financial trouble.
Faced with record-high withdrawal requests, influencers are debating whether the exchange will soon collapse in the same fashion as FTX.
On Tuesday, Binance faced billions of dollars in withdrawal pressure, which CEO Changpeng Zhao passed off as “business as usual” for the exchange.
“I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis,” he added. “It costs some network fees to run these “tests”. But keeps the industry healthy.”
Other data suggests that this is a rare occurrence, however. As revealed by on-chain analyst Joe Burnett, Bitcoin withdrawals reached a rate of 2000BTC per hour on Tuesday. “Highest rate of withdraws seen all year,” he said.
Largest 24h flow of $BTC out of Binance ever:
-39,637 BTC pic.twitter.com/nraXyco6Ai
— Dylan LeClair (@DylanLeClair_) December 13, 2022
The influx of withdrawals has Burnett thinking an FTX-like bank run could be a possibility. “Not saying it’s happening, but certainly possible. Many red flags.”
Others expressed worry over Binance’s delay in processing USDC withdrawals, compared to other cryptocurrencies. The exchange has since resumed these withdrawals, explaining that they simply needed to swap out some of their BUSD for USDC during the process.
Still, this didn’t quell concerns for Bitcoin Magazine’s Dylan LeClair, who is skeptical on multiple fronts – including its recent proof of reserves audit. The audit, which Binance released to assure its users that their Bitcoin balances are safe, still hasn’t provided clarity about the company’s liabilities.
LeClair also relayed a followers’ message claiming that Binance’s institutional capital was fleeing, and charges were soon going to be pressed against the firm.
“The shit going down at Binance is really next level,” added Bitcoiner Mike Alfred. The DOJ is going to have a field day with this.
Given the skepticism, certain influencers like Layah Heilpern urged their followers to stop spreading worry about the exchange. Hodlonaut responded saying he simply wished to see the “lies, leverage and degeneracy flushed out.”
I don’t understand why people are cheering for Binance to collapse.
You realise if Binance goes down everything else will crumble? Yes #bitcoin will survive but the entire crypto ecosystem including stablecoins will die.
— Layah Heilpern (@LayahHeilpern) December 13, 2022
Zhao said once the withdrawal panic is over, he may try to “reward” those that consistently held their funds on Binance.
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Filed under: Bitcoin - @ December 14, 2022 1:12 am