Binance Under Pressure As Withdrawals Surge

Key Insights

• Some users decided to withdraw funds from Binance amid worries about the company’s reserves report. 
• FTX’s Sam Bankman-Fried was charged with fraud. 
• Bitcoin and Ethereum moved to multi-week highs.

Traders Withdraw Funds From Binance Amid Fears About Their Safety

Recent reports indicated that users withdrew $1.9 billion from Binance in 24 hours. Binance halted withdrawals of the stablecoin USDC, which is the world’s second stablecoin by market capitalization.

Binance traders worry that the exchange’s reserves report does not show the full picture of the financial situation of the firm. In addition, the ongoing investigation of the firm by the DOJ makes some investors nervous.

According to a recent Reuters report, several DOJ prosecutors believe that they have enough evidence to file charges against Binance executives, including CEO Zhao. The exchange has been under a money laundering investigation since 2018.

Today’s news are not limited to developments around Binance as FTX CEO Sam Bankman-Fried was charged with fraud. Bankman-Fried is accused of misappropriating deposits of FTX clients to pay for expenses of his crypto fund Alameda Research.

Bankman-Fried was arrested in the Bahamas on Monday evening. He may be extradited to the U.S., which looks like the most likely outcome. It is not clear whether Bankman-Fried will fight extradition.

Crypto Markets Ignore Binance’s Problems

Binance is the world’s biggest cryptocurrency exchange, so the recent events may have a significant impact on the crypto world.

Interestingly, crypto traders are focused on the recent U.S. inflation data, which put significant pressure on the U.S. dollar. Bitcoin is up by 4% in the last 24 hours, while Ethereum gained 5%.

Binance’s BNB is down by 2%, but there is no sign of any panic. Binance USD, the exchange’s stablecoin, maintains its peg to the U.S. dollar.

For a look at all of today’s economic events, check out our economic calendar.