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Binance withdrawals jump to $3 billion in 24 hours, research firm says

By Michelle Toh, CNN

Investors withdrew as much as $3 billion from Binance on Tuesday, according to blockchain analytics firm Nansen, as a deluge of negative headlines about the cryptocurrency industry rattled users of the world’s largest exchange.

Andrew Thurman, content lead for Nansen, told CNN that at its peak, Binance saw “as high as $3 billion in net outflows” over a 24-hour period. A report about an ongoing investigation by the US Justice Department into the exchange was a factor in investors’ nervousness, he said.

“Concurrently, a large market maker, Jump, was found to have withdrawn huge sums from Binance with no deposits over the past few weeks — ultimately seems to have caused jitters among both retail and institutional users,” Thurman said. “In short, it’s a lot of money headed out, and that’s spooked some folks.”

Jump Crypto is part of the Jump Trading Group, a quantitative trading firm.

Binance CEO Changpeng Zhao said that the exchange had at one point seen “some withdrawals” of roughly $1.1 billion. The company had seen worse days before, he later added.

“We’re seeing the money flowing back already,” he said in a conversation on Twitter Spaces on Wednesday, calling the fund withdrawals “very normal market behavior.”

Zhao, who is known as “CZ,” said people were down on the crypto sector following the collapse of FTX in November. The founder of Binance’s one-time competitor, Sam Bankman-Fried, was arrested in the Bahamas this week after US prosecutors filed criminal charges against him.

“If you get hurt by one bank, you’re going to think all the other banks are bad,” Zhao said. “The fact is just because one bank is bad doesn’t mean all the other banks are bad.”

Concerns about the health of the sector have been driving down the price of digital coins. Bitcoin was last trading below $18,000, a decline of more than 60% year-to-date.

But Binance’s business is also under scrutiny after FTX’s spectacular implosion. On Monday, Reuters reported, citing unidentified sources, that US prosecutors were considering wrapping up a money laundering investigation into Binance by “filing criminal charges against individual executives including founder Changpeng Zhao.”

The US Department of Justice declined to comment.

Binance said in a statement to CNN that, “as has been reported widely, regulators are doing a sweeping review of every crypto company.”

“This nascent industry has grown quickly and Binance has shown its commitment to security and compliance through large investments in our team as well as the tools and technology we use to detect and deter illicit activity,” a spokesperson added.

Binance had initially offered to help bail out smaller rival FTX, before pulling out of the deal last month.

On Tuesday, Bankman-Fried was indicted in the United States on eight criminal charges including wire fraud and conspiracy. Separately, US markets regulators also charged Bankman-Fried with defrauding investors and customers.

Known as “SBF,” Bankman-Fried is a crypto celebrity who became a pariah overnight as his company suffered a liquidity crisis and filed for bankruptcy last month, leaving at least a million depositors unable to access their funds.

— CNN’s Julia Horowitz, Matt Egan and Allison Morrow contributed to this report.

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