One of the largest cryptocurrency exchange in the world, Binance, had anxious investors withdraw more than $1 billion on Tuesday. Hours later, Changpeng “CZ” Zhao, the company’s CEO. He appeared to be attempting to soothe market concerns following the collapse of crypto rival FTX in a message to staff members.
CZ stated in the message, “Binance will survive any crypto winter.”
According to blockchain research firm Nansen, Tuesday’s withdrawals were the exchange’s largest single-day withdrawal total since June.
Using information from Nansen, Insider’s Phil Rosen revealed on Wednesday that Binance had seen net outflows of around $3.66 billion during the seven days before December 13.
In a tweet on Tuesday, CZ attempted to dismiss public worries about clients withdrawing money. He wrote,” We saw some withdrawals today. We have seen this before. Some days we have net withdrawals; some days, we have net deposits. Business as usual for us.”
We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.
I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. ?
— CZ ? BNB (@cz_binance) December 13, 2022
However, CZ stated that Binance anticipates “the next several months to be bumpy” in the message to workers. He further added that the company “get past this challenging period.”
Sam Bankman-Fried, the creator and former CEO of FTX, was detained in the Bahamas on Monday. He also appeared to be mentioned in the message by CZ. He wrote, “With all that is going on, we know we are at a historic moment in crypto. Rest assured, this organization was built to last.”
Insider’s request for a response from Binance was rejected.
Check out the memo from the CEO of Binance
Team:
You may have seen some of the latest news regarding Binance. The FTX implosion’s fallout has brought a lot of extra scrutiny and tough questions. The good news is that, even though the news stories don’t always reflect it, we can answer the tough questions thrown at our business.
For example, despite today’s news regarding withdrawals, we are in a strong financial position. We often process more than $1b in deposits or withdrawals daily. So, it’s nothing unusual today. User assets at Binance are all backed 1:1, and Binance’s capital structure is debt free. 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.
With regard to questions on the temporary halt of withdrawals of USDC, because we auto convert USDC to BUSD in order to retain large liquidity pools, we generally retain USDC deposits for future withdrawals. In today’s case, many people deposited BUSD or USDT to withdraw USDC. When this happens, we need to convert. Our current conversion channels are clunky. We have to go through a bank in NY in USD, which is slow. We will improve this going forward.
With all that is going on, we know that we are at a historic moment in crypto. Rest assured, this organization was built to last. As long as we continue to offer users the best product, user experience, and frictionless trading environment – Binance 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. As always, I’m grateful to each of you for your incredible dedication and hard work and I’m proud of the incredible business we’ve built together.
CZ”
