Binance CEO Changpeng Zhao on Wednesday said that the situation has “stabilized” at his cryptocurrency exchange, in a bid to assuage investors’ fears after the corporate was forced to halt withdrawals of a stablecoin.
Zhao said that around $1.14 billion of net withdrawals took place on Tuesday, but tweeted that this was “not the very best withdrawals we processed, not even top [five].” The CEO said deposits are returning to Binance.
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His comments come after Binance temporarily halted withdrawals of the USDC stablecoin on Tuesday, while it carried out a “token swap.” Zhao said Binance had seen a rise in USDC withdrawals. The pausing of withdrawals was on account of the indisputable fact that some currency swaps needed to be routed through an unspecified bank in Latest York that wasn’t open, in response to Zhao. Binance resumed withdrawals after about eight hours downtime.
The episode left investors on edge, particularly after the collapse of crypto exchange FTX and subsequent arrest of its founder Sam Bankman-Fried, who’s facing federal criminal charges.
Blockchain analytics firm Nansen said on Tuesday that there have been greater than $3 billion of net withdrawals from Binance over the past seven days. However the Nansen CEO Alex Svanevik said the situation is different to FTX, which saw withdrawals to the “tune of multi-billion dollars.”
“I might say that you simply’re definitely seeing larger than normal withdrawals from Binance. And so it is unquestionably value maintaining a tally of but so far as I can tell at this cut-off date, this could be very different from the FTX situation,” Svanevik told CNBC’s “Capital Connection” on Wednesday.
Svanevik noted that Binance has around $60 billion value of assets on its exchange, of which the withdrawals represent a small proportion.
Binance’s Zhao has tried to project a way of strength internally at Binance too.
“While we expect the following several months to be bumpy, we’ll get past this difficult period – and we’ll be stronger for having been through it,” Zhao wrote in an internal memo, seen by Bloomberg.
A Binance spokesperson declined to comment on the contents of the memo.
Investors have called for more transparency from Binance’s business. Last month, the corporate issued a proof of reserve wherein it claims to have a reserve ratio of 101%. Meaning it has enough assets to cover customer deposits.
But critics have said that the proof of reserves has not gone far enough to provide assurances of Binance’s collateral. Mazars, the auditing firm Binance used for its proof of reserves, said in its five-page November report that the corporate does “not express an opinion or an assurance conclusion.”
Zhao said during a chat on Twitter on Wednesday that it holds user asset reserves one-to-one. He also said that the corporate goes to release one other batch of proof of reserves within the “next couple [of] weeks.”
A Binance spokesperson told CNBC by email that conducting a proof of custody reserves is an advanced endeavour, adding that more information will likely be forthcoming.
“To properly conduct a proof of custody reserves of this scope and scale is a really complex process, which is recent and unique to the industry and requires different degrees of internal and third-party verification on-chain than with traditional financial institutions,” the spokesperson said.
“Releasing the BTC [bitcoin] custody reserves was just the primary of many steps within the weeks ahead to supply more transparency and reassurance of our custody reserves.”
Binance added that, given recent events, the corporate seeks to develop recent methods to confirm their assets in custody, in a bid to regain user trust.