The repercussions and effects of FTX’s great collapse still linger. The atmosphere of panic, fuss and anxiety reached FTX’s big rival, Binance. The world’s largest cryptocurrency exchange does not fall off the agenda of social media. However, crypto investors have been talking about whether Binance will go bankrupt for a while.
Binance throws anxiety
Clients exited the Binance exchange for billions of dollars last week. Frustrated investors are watching for warning signs following the collapse of giant cryptocurrency exchange FTX. A few people are alarmed that issues are starting to surface on Binance. Binance has had a strong couple of weeks. New buzz has surfaced about the $2.1 billion FTX refund that the exchange’s CEO rejected. The president had hired Mazars to prepare the cryptocurrency exchange reports. However, Mazars announced on Friday that it has stopped all research into crypto industry players.
Earlier this month, the control team conducted a proof-of-reserve check on Binance’s Bitcoin holdings, as we however, only one day in late November revealed that its reserves were over-collateralised. However, the contact of the report on Mazar’s website was removed as soon as it was published.
US Department of Justice investigates Binance’s link to securities fraud
Investigators are assessing whether to initiate criminal proceedings against CEO Zho and other top executives, according to Reuters. These include conspiracy to evade tax, illegal money transfer and criminal sanctions violations. According to Reuters, Binance hid more than $10 billion in accounting fraud in 2022. He also tried to avoid regulatory agencies. Binance has recently witnessed a huge spike in withdrawals as concerns over its deposits and a DOJ investigation develop. In the midst of this, the arrest of FTX founding member Bankman-Fried further dampened faith in the cryptocurrency.
According to Nansen information, Binance processed its daily maximum withdrawals since June, with a total cash outflow of $3 billion in just 24 hours. The exchange has been forced to suspend withdrawals of USD Coins indefinitely, while raising stablecoin stocks. CZ stepped up its efforts to allay clients’ concerns about Binance’s bank reserves. He tried to fight against everything he called “FUD”. Zhao glossed over the massive cash outflow in the stock market by saying “business as usual”.
What is the future of centralized exchanges?
Binance’s proof-of-reserve report was widely condemned for lacking comprehensive or administrative control.
The percentage of user withdrawals on cryptocurrency exchanges shows that faith in centralized exchanges is waning. Besides, the arrest of Sam Bankman-Fried, who was held responsible for the FTX collapse, on serious fraud charges seems to lead to tighter scrutiny of centralized exchanges.