Binance, the largest crypto exchange in the world by trading volume, has been the target of massive FUD (Fear, Uncertainty, and Doubt, for the uninitiated) over the last couple of days. After FTX collapsed, users in the space began to question if exchanges actually held enough in their reserves to honor all customers. Given what happened to FTX, is it possible for Binance to come out of this unscathed?
Binance Withdrawals Intensify
As the FUD spread across social media platforms, Binance users had taken to withdrawing their deposits from the exchange en masse. Data aggregator platform reported on Tuesday that Binance’s withdrawals had crossed $1.9 billion, and by the end of the day, reports were that the withdrawals were eventually higher than $3 billion in a single day.
According to the data released, the withdrawals were one of the highest single-day volume for the crypto exchange, which understandably had users at the edge of their seats. However, Binance CEO Changpeng Zhao had come out to quell fears, explaining that it was nowhere near the highest single-day withdrawals the exchange had processed. Zhao explained that Binance had seen higher volumes when the LUNA cryptocurrency had collapsed, as well as during the FTX implosion.
Most of the FUD had stemmed from the ‘audit’ report from Mazars which had drawn criticism from some experts in the industry. The multiple tweets saying that the Mazars report did not qualify as an audit had gained traction, leading to the current situation.
Can The Crypto Exchange Survive?
So far, Binance has been able to wade through the enormous FUD without much of a problem. Reports on social media say that despite the large withdrawal volumes, the crypto exchange continues to honor all of them in a timely manner.
Also, data on Nansen show that deposits into the crypto exchange has been high during this time, offsetting the outflows to a significant degree. This tweet retweeted by “CZ” includes a screenshot of Nansen’s dashboard that showed Binance inflows were almost as high as outflows, resulting in negative net flows of only $378 million for the 24-hour period. CEO Zhao has referred to the current FUD as a “stress test” that “helps to build the credibility for exchanges that passes the test.”
Haters: Omg omg!! #binance saw over 6 bn in withdrawals yesterday!!
But these fudders did not tell that it got more deposits (6.56B) than withdrawals. The overall volume 12.6B $!! Many exchanges cannot even handle 100 M volume!!@cz_binance we support #Binance unconditionally!! pic.twitter.com/tIazDsLN0H
— Spidey_ElonFan (@spideycyp_155) December 14, 2022
At this time, there have been no obvious signs of struggle for the crypto exchange. Ki Young Ju, CEO of CryptoQuant, also took to Twitter to publicly state that there are no “shady on-chain activities” on the part of the exchange.