Home » Binance CEO sees slight increase in withdrawals after FTX collapse

Binance CEO sees slight increase in withdrawals after FTX collapse

by admin

Billionaire and CEO of Binance Holdings Ltd. Changpeng Zhao speaks during the Web Summit session in Lisbon, Portugal on Wednesday, November 2, 2022.

Zed Jameson | Bloomberg | Bloomberg | Getty Images

Binance CEO Changpeng Zhao said the cryptocurrency exchange is operating normally, with withdrawals increasing slightly despite digital asset prices falling after the collapse of FTX.

Speaking on Twitter during a live “ask me anything” session on Monday, Zhao said there was “no news of large withdrawals” from the many “cold” cryptocurrency wallets the company has detailed in the wake of FTX’s bankruptcy. He said.

Binance said there was a “slight increase in withdrawals,” adding that this was consistent with typical activity during periods of downturn in the cryptocurrency market. “Every time the price goes down, we get more withdrawals,” said Zhao. “It’s very normal.”

After bouncing stubbornly at the $20,000 level for months, volatility returned to Bitcoin last week as news of FTX’s liquidity crisis roiled the market. Bitcoin was trading at a price of $16,600 in London on Monday afternoon, barely moving in the last 24 hours.

“We have never seen 80% withdrawn from a cold wallet or 50% exfiltrated from a platform, but it may have happened on other platforms,” said Zhao. “For us, it’s still business as usual.”

FTX filed for bankruptcy on Friday after facing a liquidity crisis as investors fled concerns about its financial health. Binance originally made an offer to buy the company, but after a short period of due diligence, it pulled the deal.

Crypto-contagion

FTX’s troubles began after a CoinDesk report detailed a relationship between FTX and its sister company, Alameda Research.

Zhao’s subsequent tweet said he would sell Binance’s $580 million exchange native FTT token “due to recent revelations,” sparking a sell-off of FTT and billions of dollars in withdrawals from FTX. I was.

On Monday, Zhao said he did not intend to cause “turmoil” in the cryptocurrency market, and while some have accused him of “poking the whistleblower and poking the bubble,” his tweets caused such damage. He added that he didn’t know it would cause it.

“There will be some cascading contagion effects,” Zhao said of the potential for more players to face the crisis after the fall of FTX. He added that the scale of cryptocurrency company failures and the resulting decline in digital currency prices will decrease over time.

“In situations like this, it’s usually the big one that goes down first,” says Zhao. “The cascading effect is getting smaller and smaller.”

This year’s crypto crisis is largely due to a mix of businesses that owe money to others, with their reserves tied up in illiquid tokens.

In May, $60 billion stablecoin project Terra saw its two main tokens lose value after the sustainability of its technology model was called into question. The result was a wave of crypto failures, with Celsius, Three Arrows Capital, and Voyager Digital all filing for bankruptcy protection.

Commenting on the collapse of FTX and the subsequent sale of cryptocurrencies, Zhao said, “In a few years it will all be blown up.” “People may not remember this.”

Earlier Monday morning, Zhao said that Binance would set up an “industry recovery fund” to help distressed companies and “reduce further cascading ramifications.” Few details about the fund have been revealed, but according to Binance bosses, more details will be revealed soon.

Binance has its own venture fund that invests in cryptocurrency projects called Binance Labs. So far, Zhao said he has not heard “a big call for help” from investee companies that are “much less impacted” than others in the industry.

How the $60 Billion Crypto Collapse Worried Regulators

Related Posts

Leave a Comment