Another Collapse After FTX? World's Biggest Crypto Exchange Binance Sees $12 Billion Gone In 60 Days

It's been just two months since the collapse of FTX rocked the cryptocurrency world. And now, Binance, the world's largest cryptocurrency exchange, seems to be struggling. Is the crypto market going to witness an even bigger collapse? That remains to be seen. But for now, Binance is finding it difficult to hold onto its assets. Binance has witnessed a mammoth $12 billion crypto withdrawals in barely 60 past days, as per Forbes report.

Vanya GautamUpdated: Jan 10, 2023, 14:37 IST
4 min read
binance ceo changpeng zhao
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It's been just two months since the collapse of FTX rocked the cryptocurrency world. And now, Binance, the world's largest cryptocurrency exchange, seems to be struggling to hold onto its assets.

So, is the crypto market going to witness an even bigger collapse? That remains to be seen.

$12 Billion Crypto Withdrawals In 60 Days

binance unsplash

In the wake of the collapse of rival FTX, investors have been pulling their crypto in recent weeks, and despite assurance from CEO Changpeng Zhao that the situation had ¡®stabilized¡¯, outflows are accelerating. Binance has witnessed a mammoth $12 billion crypto withdrawals in less than 60 days, as per Forbes.

Customers withdrew a net $360 million last Friday, according to data from crypto data firm Defillama.

binance crypto withdrawals forbes

Also Read: After Being 'Sorry' For FTX Collapse, Former CEO Sam Bankman Pleads Not Guilty

The Rollercoaster Since FTX Collapse

After FTX's collapse in early November, Binance saw a substantial boost of 30% in trading activity in that month. It's important to remember that the catalyst for the FTX collapse was Binance¡¯s Chief Executive Officer Changpeng ¡°CZ¡± Zhao¡¯s November 6 announcement that the exchange was selling its holdings of FTT because the native token of FTX was too risky. FTX had operated the second-largest spot and derivatives exchanges.

Binance had walked away from the deal to acquire rival FTX, citing problems with FTX's finances, a day after it was widely speculated in crypto market that Binance would soon acquire FTX.

On December 13, Nansen, a separate crypto data firm broke the news that Binance had lost $3 billion of assets over the previous week, representing 4% of the firm¡¯s total at the time. A Forbes investigation revealed that Binance, in fact, lost 15% of its assets since a Twitter posting by Zhao (widely known as CZ) on the same day as he downplayed the Nansen report withdrawals. Still nearly a quarter of Binance assets left the exchange in less than two months. Forbes reached out to Binance seeking comments for this story but did not receive a response by publication time.

Investors¡¯ lack of trust is best seen in the performances of Binance Coin (BNB) and Binance USD (BUSD), the two tokens bearing the exchange¡¯s name. BNB lost 29% of its value in the past two months, and Forbes estimates that leaves about 29 million of the tokens at Binance, 51% less than disclosed by the exchange on November 10. Meanwhile, the number of BUSD stablecoins at the firm sank by 40%.

There are also more subtle ways in which Binance seems to be losing trust and influence. While net assets dropped by 24% since November, the investors in well-known tokens like matic, ape, and gala pared their assets at the exchange by 40-50%.

Also Read: Mystery Of Terra Luna Crash Deepens After FTX Collapse

Crypto Market Collapse's Effect On Binance

Although it remains the largest cryptocurrency exchange by volume, Binance is not unscathed by the nearly yearlong decline in digital assets. Its BNB token is down almost 37% from 12 months ago, according to Nomics, and the exchange¡¯s decision to stop charging fees for spot bitcoin trading as the market faltered cost it about $3 billion a year in lost revenue per Forbes estimates.

The overall value of cryptocurrencies has shown an even larger decline, dropping 56% over the past year, to $848.7 billion, CoinMarketCap data show. Binance CEO CZ himself contributed to the demise of FTX in November when he announced on Twitter that he was planning to sell his holdings of the rival exchange¡¯s FTX tokens, then worth about $580 million, citing ¡°recent revelations that have come to light.¡±

binance backs out of ftx deal headtopics

He followed that with a quickly rescinded rescue offer, claiming FTX¡¯s ¡°issues are beyond our control or ability to help,¡± implying that an initial look at the company¡¯s books showed a more severe situation than previously thought.

As the troubles continue for the crypto market, which has already suffered trillions of dollars in lost market value, besides the Terra Luna and FTX collapses, it now remains to be seen whether the biggest crypto exchange manages to hold onto its assets amidst large-scale withdrawals, or it turns out to be another crypto exchange's collapse after FTX.

Also Read: How 10 Major Cryptocurrencies Have Performed This Year

For the latest and interesting financial news, keep reading Indiatimes Worth. Click here.

22/11/2024 16:29:21
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