The repercussions and effects of FTX’s great collapse still linger. The atmosphere of panic, anxiety and fear 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 is worrying
Clients exited the Binance exchange for billions of dollars last week. Worried investors are watching for warning signs following the collapse of giant cryptocurrency exchange FTX. A few people are worried that problems are starting to appear on Binance. Binance has had a rough few weeks. New concerns have surfaced about the $2.1 billion FTX refund, which the exchange’s CEO declined. The leading cryptocurrency exchange agreed with Mazars to prepare the reports. However, Mazars announced on Friday that it has stopped all research into crypto industry players.
As we reported on cryptokoin.com, earlier this month the audit team conducted a proof-of-reserve audit on Binance’s Bitcoin holdings. However, only one day in late November revealed that its reserves were over-collateralised. However, the link to the report on Mazar’s website was removed at the time of publication.
US Department of Justice investigates Binance’s involvement in securities fraud
Investigators are considering whether to initiate criminal proceedings against CEO Zho and other top executives, according to Reuters. These include conspiracy to evade tax, illegal transfer of funds 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 fears over its deposits and a DOJ investigation develop. Meanwhile, the arrest of FTX founding member Bankman-Fried further undermined confidence in the cryptocurrency.
According to Nansen data, Binance processed the maximum daily withdrawals since June on Tuesday, with a total cash outflow of $3 billion in just 24 hours. The exchange was forced to temporarily suspend withdrawals of USD Coins while raising stablecoin stocks. CZ stepped up its initiatives to allay clients’ fears about Binance’s bank reserves. He tried to fight back 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 not including a comprehensive or administrative audit.
The percentage of user withdrawals on cryptocurrency exchanges shows that trust in centralized exchanges is declining. In addition, the arrest of Sam Bankman-Fried, who was held responsible for the FTX collapse, on serious fraud charges seems to lead to a tighter scrutiny of centralized exchanges.