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Surge in Binance Withdrawals Coincides with CFTC Indictment

Following the CFTC’s recent charges against Binance, there has been a marked increase in net withdrawals from the platform. This trend was observed in the days leading up to and following the announcement of the charges. The surge in withdrawals has highlighted investor concerns about the regulatory status of cryptocurrency exchanges and the potential risks associated with using unregulated platforms.

Examining the Impact of CFTC Charges on Binance’s Crypto Holdings

On-chain data has revealed that Binance witnessed a significant withdrawal of hundreds of millions of dollars in cryptocurrency shortly after it was hit with civil charges by the CFTC on Monday. Reports from Nansen indicate that the exchange experienced a net outflow of approximately $400 million in the past 24 hours alone.

Comparatively, Binance has experienced over $2 billion in outflows during the past seven days, indicating that Monday’s outflow was higher than the average. In addition, Nansen identified that smart money traders withdrew at least $9 million from Binance within 24 hours of the CFTC charges being filed. Moreover, Thanefield Capital’s data suggests that there were substantial stablecoin outflows of around $1.5 billion across multiple exchanges in the 12 hours before the indictment was made public.

Shortly after the CFTC charged Binance and its CEO Changpeng Zhao (CZ) with violating consumer protection laws, the exchange experienced a massive withdrawal of $850 million worth of cryptocurrency. One hour later, an additional $240 million in outflows was reported from Binance.

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Binance holds $63.7 billion in cryptocurrency, according to data from Nansen, based on wallets publicly tagged as belonging to the exchange. Glassnode’s data reveals that this amount includes over $2 billion worth of USDT, $17 billion worth of Bitcoin, and $8.1 billion worth of Ether.

The charges against Binance by the CFTC include allegations of flouting KYC obligations, lacking proper registrations, and other consumer protection law violations. These charges serve as a reminder that regulatory compliance and transparency are crucial for cryptocurrency exchanges to maintain investor trust and confidence.

The CFTC’s accusations against Binance include some of the most serious charges against the exchange, with suggestions that it may have knowingly enabled transactions involving organized crime and terrorist groups. This claim is backed up by internal chat logs referenced in the CFTC’s filing, which feature Binance’s then-Chief Compliance Officer Lim and a money laundering reporting officer.

Zhao’s Response to CFTC Suit Against Binance

In response to the CFTC’s lawsuit against Binance, CEO Changpeng Zhao defended the exchange’s compliance technology in a blog post, stating that the charges represented an incomplete recitation of facts. Zhao emphasized the exchange’s know-your-customer program and highlighted that Binance had 750 people in its compliance teams, many of whom had prior law enforcement and regulatory agency backgrounds. Additionally, the company held 16 licenses and registrations worldwide, according to Zhao.

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However, the CFTC alleged that Binance, including its US affiliate Binance.US, had created a system to conceal its true reach and operations. CFTC Chief Counsel Gretchen Lowe referred to internal chats and emails as evidence of Binance’s “willful evasion of U.S. law.”

Zhao also outlined Binance’s internal policies to prevent conflicts of interest and insider trading, including a 90-day no-day-trading policy for employees and a prohibition on trading in futures. These measures are in place to prevent any perception of impropriety in Binance’s operations.


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