Binance faces an important stress test a month after releasing its Proof of Reserves.
Binance Faces Billions in Withdrawals
Binance is facing FUD which has caused a run of withdrawals from the exchange.
According to data from Nansen, Binance saw more than $4 billion in net withdrawals from December 7 – 13. The total value of the on-chain wallets of Binance fell from $65 billion to $60 billion between Dec. 13-14.
Amidst all this FUD, Anastasia Kor, the CMO and board member of the crypto firm Choise.com, responded to the question: What could be the future for Binance and other exchanges?
“Binance exchange is currently under pressure as liquidity keeps exiting the trading platform on account of large volume traders kept making withdrawals. With net withdrawals coming in at $3.6 billion from Dec 7 to 13, Binance is poised to show the strength of its reserves as it published earlier in November. For companies facing a related liquidity crunch, the best thing to do is to maintain a good PR such that the panic in the community can be reduced to the barest minimum.
The nearly $4 billion is the largest outflow since the exchange publicly shared its addresses just over a month ago on November 11. The drama surrounding Binance has been a good test for the exchange.
Anastasia Kor continued:
As far as Binance is concerned, the exchange has deep reserves that can help it survive these withdrawal strains. Based on the current distrust for exchanges in the industry today, more trading platforms may still experience massive liquidity loss that may likely be about their demise. At every negative sentiment hurled at the exchange, investors will be triggered to withdraw their funds and this can be detrimental as no investor wants their funds to be trapped on a bankrupt exchange.
The stress test reached its peak when Binance paused USDC withdrawals on Tuesday, December 13––to much public outcry. Binance had to remind the public that transfers go through a New York bank that has daytime operating hours. The exchange resumed USDC withdrawals later in the day.
Binance CEO Changpeng Zhao (CZ) took to Twitter to calm the public, where he gave comments that explained this as business as usual for a centralized exchange.
As the FUD around Binance and crypto continues, the mettle of the industry will be tested. Kor ended:
“As to whether other exchanges will experience a liquidity crunch in the future, I might say it’s highly probable as FUD and negativity in the community drive this trend. This winter season is a real strength test for the market.”
What is Binance:
Binance positions itself as the world’s leading blockchain ecosystem and crypto-asset infrastructure provider with a financial product suite that includes the largest digital asset exchange by volume. The Binance platform aims to increase the freedom of money for users and features a comprehensive portfolio of crypto-asset products and offerings, including trading and finance, education, data and research, social good, investment and incubation, decentralization, and infrastructure solutions.
Where to find Binance:
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