Fears of Binance Collapse Pushes Exchange Outflows to $8B

Binance outflows continued this week as concerns about the company accelerated. These concerns became more pronounced after the decision by Mazars to cease its crypto audits. As a result, the Binance Coin has plunged by more than 38% from its highest level on November 9.

Binance outflows intensify

Binance is the biggest crypto exchange in the world. At its peak during the recent crypto bull run, the company had over 100 million customers from around the world.

Binance has always been a unique company. For one, it has operated in several countries without being regulated. At the same time, the company has avoided having a fixed global headquarter. Therefore, several regulators have warned about the firm.

Binance has always insisted that it is a safe brand whose crypto holdings are intact. In November, it boost its transparency metrics by publishing its proof-of-reserves. The statement was signed by Mazars, a mid-size global accounting firm.

However, investors cited several gaps in the statement. First, the statement only mentioned the amount of Bitcoin that Binance holds. It said nothing about its liabilities, which they believe are important. Further, the statement was not detailed enough.

Therefore, investors have decided to dump their Binance holdings. Some have sold their coins while others have moved them to self custody. According to DeFi Llama, total outflows in the past 30 days have totaled over $11 billion. In the past 24 hours, Binance has lost assets worth over $202 million. As a result, the total amount of clean assets stands at $45 billion.

On a positive side, Binance has managed to process all these outflows without a hitch. Also, this is not the first time that investors have raised concerns about Binance.

Other exchanges have also had some outflows. For example, Bitfinex has lost $808 million while KuCoin has lost over $100 million in the same period. 

Will Binance collapse?

It is highly unlikely that Binance will collapse just as FTX did. For one, Binance appears to be more open about its finances than other exchanges. At the same time, Binance does not operate an Alameda-like hedge fund. As you are possibly aware, FTX collapsed because the company was commingling funds with Alameda Research.

Still, without a well-audited financial statement, crypto investors are recommended to move their coins to self-custody. This means holding them in cold storage platforms like Trezor or in wallets like MetaMask.