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Calm returns to crypto as Binance CEO sees 'stabilization'

By Geoffrey Smith

Investing.com -- A degree of calm returned to the cryptocurrency space overnight as Binance chief executive Changpeng Zhao said a wave of customer withdrawals from the world's biggest crypto exchange had eased.

"Things seem to have stabilized," Zhao tweeted, adding that "deposits are now coming back in" to the exchange and describing the situation as "business as usual."

Binance had had to suspend withdrawals of USD Coin, a stablecoin that acts largely as a gateway between the crypto and fiat currency spaces, temporarily on Tuesday, unable to keep pace with a flood of withdrawal requests from customers spooked by an increasingly loud drumbeat of negative news around digital currencies. However, it lifted that suspension in time at the start of the U.S. business day.

"Yesterday was not the highest withdrawals we processed, not even top 5," Zhao said, adding that Binance had had bigger outflows in the wake of the Terra/Luna and FTX collapses.

Zhao estimated on Tuesday that Binance had experienced net withdrawals of around $1.14 billion, considerably lower than an estimated high of $3B by crypto analytics firm Nansen. Binance's disclosed asset holdings have fallen to around $60.0B from $62.5B earlier in the week, according to Nansen data.

Analytics firm Arkham Intelligence corroborated around $1B worth of new USD Coin deposits in Binance over the last 24 hours. Although it couldn't identify their source, it said: "This means that amidst the volume of withdrawals, there is plenty of capital still willing to stay on @binance."

Binance has been under pressure to distance itself from the collapse of FTX and the disgrace of its founder Sam Bankman-Fried, who was charged on Tuesday with running a multi-billion dollar fraud by the U.S. Securities and Exchanges Commission. He was denied bail by a Bahamas court late on Tuesday due to perceived flight risk.

FTX collapsed in November after funneling more than $8B of customers' money into covering up losses by Bankman-Fried's hedge fund Alameda Research, according to the SEC's indictment.

While both FTX and Binance are both centralized exchanges, Zhao has repeatedly asserted that customer deposits at Binance are adequately ringfenced. An attestation from international tax and law firm Mazars published last week, however, stopped short of endorsing those claims.

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