Binance Experiences Largest Stablecoin Outflow Ever As Crisis Of Confidence Around The Exchange Deepens

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Some say it’s a well deserved reward for causing FTX to go down. Others contend that this is just a manifestation of the infection that has been slowly but irreversibly spreading through every possible crack in the crypto realm. Regardless of the reason behind the recent wave of turmoil, it is an undeniable fact that Binance appears to be in turmoil.

Over the past 24 hours, nearly 40,000 Bitcoins have been removed from Binance.

Moreover, the exchange just recorded the largest-ever outflow of stablecoins in a 24-hour window, surpassing $2 billion.

Source: https://defillama.com/protocol/binance-cex

This sudden exodus of funds is now having a significant impact on Binance’s metric of Total Value Locked (TVL), which reached over $67 billion in 11 months.The tenth in November but now it’s only down to about $60 billion, which is a drop of about $7 billion — most of it happened in the last 48 hours.

So, what went wrong? First, Binance tasked Mazars with conducting an “audit” of its Bitcoin reserves. However, according to the auditor’s press release last week, the examination was very narrow in its breadth, focusing only on assets “in scope” and the use of “agreed procedures.” In what proved to be a critical point of contention, the auditor noted:

“A agreed-upon procedures engagement is not a review, review or other assurance engagement. A agreed-upon procedures engagement does not involve obtaining evidence for the purpose of the practitioner expressing an opinion or assurance conclusion in any form.”

Significantly, Binance’s Proof of Reserves certificate has been masked around the exchange’s liabilities, with CZ putting the proverbial gauntlet in the following words:

“Obligations are harder; we don’t owe loans to anyone; ask around.”

Additionally, as we reported yesterday, Reuters sent another wave of jitters this week when it reported that the US Department of Justice (DoJ) is currently divided over whether to formally file charges against Binance in a money laundering investigation that began in 2018, with some investigators pushing Now to move aggressively against key Binance executives, including co-founder and CEO, Changpeng Zhao (CZ). Furthermore, attorneys for the company have been meeting with Justice Department officials over the past few months to discuss a potential deal or out-of-court settlement.

Binance responded to the report by denying any “insight” into the inner workings of the Justice Department while highlighting the exchange’s contribution to supporting the law.

Then, Tron founder Justin Sun sparked another wave of anxiety when he withdrew more than $33 million USD (BUSD) and more than 15 million Tether (USDT) from the exchange.

The suspension of USDC withdrawals on Binance exacerbated the atmosphere of fear among investors.

Of course, as investors panicked, Sun quickly deposited $100 million into Binance, with Changpeng Zhao later explaining that Sun’s withdrawal was “part of the deployment of BUSD on TRON.”

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Throughout this saga, Changpeng Zhao has continued to show confidence in Binance’s financial viability through Twitter:

“I think it’s a really good idea to ‘stress test withdrawals’ at every CEX on a regular basis.”

Source: https://coinmarketcap.com/currencies/bnb/

Despite CZ’s protests, BNB remains under pressure as the entire crypto world continues to hold its collective breath over the issue of Binance’s solvency.

Do you think CZ is now facing karma for his epic FTX arrogance? Let us know your thoughts in the comments section below.

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