Binance loses a lot of money due t the trust crisis
Investors have withdrawn over 1 billion dollars from Binance in just one day. The reason for this is the crisis of trust in digital tokens with which the world’s largest cryptocurrency exchange is currently struggling. Within seven days, net outflows of over 3.6 billion US dollars were recorded.
Investors in the crypto market have been very cautious about investing since the collapse of FTX. Last month, investors withdrew record amounts of Bitcoin from crypto exchanges. Since Binance only published its assets, not its liabilities, it is hard to say anything about its financial status. According to the company, all customer deposits are covered by corresponding assets and the capital structure is debt-free.
Earlier this week, investor nervousness increased once again: Binance is facing a criminal investigation in the US for its handling of US money laundering and sanctions laws. In the past year, Binance is said to have already responded to more than 47,000 requests from law enforcement agencies. According to the company, this procedure is not scary as they have already proven their commitment to security and compliance.
On Tuesday, the exchange said it had temporarily paused withdrawals of USDC, a crypto token equivalent to the value of the US dollar, while it conducted a “token swap” with the coin.
USDC withdrawals resumed about 8 hours after Binance first announced the withdrawal suspension. Investors use USDC to trade various cryptocurrencies without the need to change the money back to US dollars. If traders withdraw USDC from Binance, they might transfer to another platform. The company’s chief executive said all transfers in USDC from the stablecoin known as PAX, as well as Binance’s token BUSD, will have to be routed through a New York-based bank that is not yet open. A token swap could be a way for Binance to quickly get more USDC while banks are closed to resume withdrawals for customers.
Check out our blog post to stay up to date.
Contact us HERE if you would like to join the Web3.