Crypto firm Binance says deposits returning after heavy withdrawals

10:56 am Wednesday, December 14th, 2022

By Tom Wilson and Rae Wee

LONDON/SINGAPORE (Reuters) -The head of major crypto exchange Binance said on Wednesday deposits were returning, a day after it saw heavy outflows of cryptocurrencies and halted some stablecoin withdrawals.

On Tuesday, blockchain data firm Nansen said Binance saw withdrawals of $1.9 billion in 24 hours, the largest such outflow since June. Users had pulled out $3.7 billion in crypto over the seven days to Tuesday, it later added.

Binance, the world’s largest crypto exchange, also temporarily halted withdrawals of the major USDC stablecoin, citing a so-called “token swap”.

“Things seem to have stabilised,” CEO Changpeng Zhao tweeted. “Yesterday was not the highest withdrawals we processed, not even top 5.”

Binance has seen net inflows in the last 24 hours of tokens on the ethereum blockchain totalling around $718 million, Nansen told Reuters. Binance did not immediately respond to a request for comment.

How crypto exchanges such as Binance and its now-bankrupt former rival FTX handle customer deposits has come under close scrutiny from users, regulators and policymakers.

Binance said on Tuesday it always had “more than enough funds” to meet withdrawal requests. “User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free,” a spokesperson said.

The exchange is also facing legal pressures. Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation focused on Binance’s compliance with U.S. anti-money laundering laws and sanctions, Reuters reported on Monday, sparking a 4% drop in Binance’s own BNB token.

Nansen CEO Alex Svanevik told CNBC that the reporting had lead to “concern in the market” with investors staying cautious and withdrawing crypto from exchanges.

“FUD brought “stress test”, which in turn helps to build the credibility for exchanges that passes the test,” Zhao tweeted on Wednesday, using an acronym for “fear, uncertainty and doubt” often used in crypto in relation to news perceived as negative.

(Reporting by Tom Wilson and Rae Wee; editing by Gerry Doyle, Jason Neely and Louise Heavens)