Concerns over Binance reserve report drive withdrawals

Key points:

Binance suffered a flood of withdrawals on Monday amid concerns over its proof-of-reserves report.
Binance’s net outflows over the past 24 hours exceeded all other centralized exchanges, almost nine times the next largest outflows.
Given the reported $64 billion in assets on Binance, the outflow “doesn’t seem particularly out of the ordinary,” Arkham analyst Henry Fisher wrote.
Proof-of-reserves report has been criticized for its narrow scope by industry experts and recent reports.
U.S. prosecutors are considering possible criminal charges against Binance for money laundering.

Binance, the world's largest cryptocurrency exchange by trading volume, suffered a flood of withdrawals on Monday amid concerns over its proof-of-reserves report.

According to blockchain intelligence platform Nansen, the past 24 hours totaled $902 million in net outflows, the difference between the value of assets moving into and out of exchanges.

Binance’s net outflows over the past 24 hours exceeded all other centralized exchanges, almost nine times the next largest outflows.

Binance endured the largest daily outflow among CEXs. [Nansen]

Binance saw its highest outflows since Nov. 13, two days after FTX filed for bankruptcy protection, according to data from blockchain data platform Arkham Intelligence.

However, given the reported $64 billion in assets on Binance, the outflow “doesn’t seem particularly out of the ordinary,” Arkham analyst Henry Fisher wrote in a Telegram chat.

The surge in withdrawals comes after a series of worrisome news reports about Binance and investors growing cautious about their funds on the centralized exchange. The rapid collapse of rival exchange FTX, combined with collapses in other industries, has prompted other exchanges to demonstrate that they are protecting customers' assets.

Criminal charges against Binance?

Binance released a report from audit firm Mazars last week, claiming that its Bitcoin (BTC) reserves are overcollateralized. The document has been criticized for its narrow scope by industry experts and recent reports, with Reuters reporting on Monday that U.S. prosecutors are considering possible criminal charges against Binance and its executives, including Zhao, for money laundering.

Binance did not respond to a request for comment. Founder and CEO Changpeng Zhao tweeted, urging his followers to “ignore FUD” — cryptocurrency slang used to spread fear, uncertainty, and doubt.

Major cryptocurrency market makers Jump Trading and Wintermute have both been moving large amounts of funds from Binance over the past seven days, according to blockchain data.

Nansen analyst Andrew Thurman wrote in a tweet that Jump Trading appears to be Binance's biggest pullback.

Net withdrawals of digital assets from exchanges by Jump-connected crypto wallets reached $146 million over the past seven days, according to data compiled by Nansen.

Jump’s net withdrawals included $102 million in Binance Dollar (BUSD), the exchange’s Paxos-issued stablecoin; $14 million from Tether; and $10 million in ether (ETH).

According to Arkham blockchain data, Jump redeemed about $30 million in Binance USD (BUSD) from Paxos a few hours ago.

Jump Trading’s crypto wallet transferred of $30 million BUSD to the Paxos in three separate transactions. [Arkham Intelligence]

Wintermute, another major cryptocurrency market maker, withdrew $8.5 million in Wrapped Bitcoin (wBTC) and $5.5 million in Circle’s USDC stablecoin.

Wintermute acknowledged in a Nov. 9 tweet that some funds remained on Sam Bankman-Fried’s FTX cryptocurrency exchange, which suffered a massive implosion last month. Jump Trading tweeted on Nov. 12 that the firm is well capitalized, but did not disclose any losses or capital exposure to FTX.