Binance Holdings Ltd. founder Changpeng “CZ” Zhao said outflows from the largest cryptocurrency exchange have “stabilized” while warning employees that the industry’s recovery from rival FTX’s collapse will be “bumpy.”
In a tweet on Wednesday, Zhao said “things seem to have stabilized” and that “deposits are coming back in.” He’d earlier said Binance saw about US$1.14 billion of net withdrawals on Tuesday. Binance has at least US$60 billion in on-chain reserves, according to data from the blockchain analytics firm Nansen.
Customers pulled funds from Binance’s platform this week amid a lack of confidence in the crypto sector following the implosion of rival exchange FTX. Sam Bankman-Fried, FTX’s co-founder, has been charged with fraud for allegedly misappropriating billions of dollars of customer money.
“People generalize. People get hurt by one exchange, and they lost money there, and they generalize that. That’s just human behavior,” Zhao said in a Twitter Space moderated by Binance on Wednesday. “There’s no amount of withdrawals that will put us under pressure.”
The crypto billionaire also sought to reassure his employees, saying in a memo to staff that Binance is in a strong financial position and “will survive any crypto winter.”
“While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it,” he wrote in the memo, which was seen by Bloomberg News.
See also: Bitcoin resumes advance, rekindles US$100,000 milestone optimism
A net US$256 million flowed into Binance in the past 24 hours as of 12:25 p.m. in Singapore on Wednesday, according to data from Nansen. Over the past seven days, there was a net outflow of US$1.2 billion. Nansen’s snapshot doesn’t take into account Bitcoin movements.
While Binance has seen outflows, Circle Internet Financial CEO Jeremy Allaire said during a CNBC interview Wednesday that demand has risen for its stablecoin, known as USDC.
“We’ve seen a huge surge in USDC net issuance over the past 24 hours, increasing almost US$2.5 billion dollars, while Binance USD declined by over US$3 billion,” he told CNBC.
See also: Bitcoin retreats from US$100,000 in worst spell since Trump’s win
Responding to questions about the recent outflows and concerns about transparency, a Binance spokesperson said by email: “People deposit and withdraw assets everyday for a variety of different reasons. User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free.”
Binance weathered a record daily net outflow of Bitcoin and Ether in terms of the number of tokens withdrawn on Tuesday, according to research firm CryptoQuant. A net 40,353 Bitcoins and 278,017 Ether tokens were withdrawn, the figures indicate.
“We maintain hot wallet balances to ensure that we always have more than enough funds to fulfill withdrawal requests and we top up hot wallet balances accordingly,” the spokesperson added. Hot wallets are digital repositories for tokens that are connected to the internet.
Binance in a November blog post shared details of digital-asset wallet addresses with tokens worth about US$69 billion.
Last week, the exchange released a proof of reserves report. The document, based on a snapshot review by accounting firm Mazars, showed the exchange having sufficient crypto assets to balance its total platform liabilities. The report also acknowledged limitations, as it didn’t amount to a full financial audit that would give a clearer picture of Binance’s overall health.
“We are working collaboratively with Mazars to share all relevant financial information with them so that they can verify the accuracy of all the data we have shared as well as our process for extracting the data,” the spokesperson said. “We are working on getting the next update for additional tokens published as soon as possible.”
Binance Coin, the native token of Zhao’s ecosystem, could be viewed as an arbiter of investor sentiment toward the exchange. Over multi-year periods it’s significantly outperformed a gauge of the largest 100 tokens. But it’s down about 5% so far this week, even as the wider gauge has added roughly 2%, according to data compiled by Bloomberg.
