Nearly $12 Billion Vanishes From Binance’s Assets; What’s Going On?

According to a recent analysis, crypto investors have started withdrawing their digital assets from the Binance crypto exchange in recent weeks following the demise of the rival FTX. And, in spite of CEO Changpeng “CZ” Zhao’s reassurances that the crisis had been brought under control, the rate of outflows is only increasing. Customers withdrew a net amount of 360 million dollars on Friday and it certainly seems like the world’s largest digital asset exchange, Binance, is having trouble maintaining its holdings.

Binance Amidst Chaos

The underperformance of the exchange’s indigenous tokens, Binance Coin (BNB) and Binance USD (BUSD), is indicative of investors’ skepticism. The value of BNB has dropped by 29% in only a little over two months. Whereas, BUSD has also dropped in market cap, thus losing out on its 6th rank to XRP.

Nansen, an independent crypto data business, reported on December 13 that the top crypto exchange Binance had lost $3 billion in assets over the previous week, or 4% of the company’s total at the time. The exchange lost almost 15% of its assets after Zhao negated the withdrawals from the Nansen article on Twitter the same day. Even still, in only two months, roughly a quarter of Binance’s assets left the exchange.

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Binance appears to be losing credibility and clout in less obvious ways as well. Even while the exchange’s total value has decreased by 24% since November, investors’ holdings of popular tokens like MATIC, APE, and GALA have also been reduced by between 40% to  50%.

Binance’s Doubtful PoR

On January 4, CoinMarketCap displayed a balance of $9.58 billion BUSD, which was over $3.5 billion less than the $13.1 billion and $13.2 billion respectively that were announced by Nansen and Defillama. It reported the portfolio allocation to be BNB at 31.86%, BUSD at 19.15%, USDT at 16.73%, BTC at 9.87% and ETH at 7.16%. The remaining were attributed to the “Others” category.

Defillama data show that the reduction in BUSD holdings has been consistent, with notable drops (at least $1 billion) on November 25 and December 14—the latter day being the day following CZ’s solace-inducing tweet. The net loss in only one day during this second significant BUSD decrease was staggering, coming in at $3.46 billion. On January 4, USDT and USDC coins on the centralized exchange simultaneously doubled to a total $6.27 billion.

This disparity is indicative of trust issues with Binance, and given the exchange’s prominence in the crypto market, it’s reasonable to worry that these suspicions could spread if they materialize. Yet, there hasn’t been much media attention about Binance or significant market turbulence, but if withdrawals keep rising at their current rate — it might end up having catastrophic effects on digital assets and on market participants.

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Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now – he has seen it all.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.