Crypto exchange Binance is experiencing mass customer withdrawals as the company’s finances remain uncertain and the crypto industry faces turmoil.
Binance has seen net outflows of $1.6 billion over the past 24 hours, compared to $1.9 billion of net outflows last week, according to The Wall Street Journal. CEO Changpeng Zhao (CZ) said on Twitter that there has been an increase in USDC withdrawals, a crypto “stablecoin” tied to the U.S. Dollar.
On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open. 1/2
— CZ 🔶 Binance (@cz_binance) December 13, 2022
Binance “temporarily paused” withdrawals of USDC overnight, which CZ attributed to banks being closed, Reuters reported. He said on Twitter the situation would be addressed when banks open in the morning. (RELATED: Billionaire Dem Donor And Former Crypto CEO Sam Bankman-Fried Arrested In Bahamas)
CZ explained swamps to USDC go through a bank in New York in U.S. dollars. The company said it is conducting a “token swap” of USDC in a separate Tweet, and withdrawals would resume once the swap is complete. Binance has not provided an update on the situation for the past few hours.
#Binance is conducting a token swap involving $USDC. As a result, $USDC withdrawals are temporarily paused.$USDT & #BUSD withdrawals are available and unaffected. $USDC withdrawals will reopen once the token swap is completed. https://t.co/CxgCGBUJEA
— Binance (@binance) December 13, 2022
Traders have grown concerned about Binance after its “proof of reserve” report left questions about the company’s finances, The Wall Street Journal reported. The company hired an outside accounting firm to conduct the report about a small portion of its financial data, according to WSJ.
Binance was seeking to reassure customers about the safety of their holdings after the collapse of competitor FTX, WSJ reported. It is a private company and not required to release comprehensive financial statements, WSJ continued.
FTX, founded by disgraced former crypto billionaire Sam Bankman-Fried, filed for Chapter 11 bankruptcy in the wake of a report alleging the misuse of customer funds.
Bankman-Fried has been charged by the Securities and Exchange Commission (SEC) for fraud and he will be indicted by federal prosecutors on Tuesday according to multiple reports. He was arrested in the Bahamas presumably for extradition to the U.S.
Binance did not immediately respond to a request for comment.
