Binance CEO CZ Addresses Misleading Data on Crypto Outflows Amid SEC Lawsuit
Binance, the world’s largest cryptocurrency exchange, has been in the spotlight due to lawsuits filed by the U.S. Securities and Exchange Commission (SEC). One area of concern has been the reported outflows from Binance. To address the issue, Binance CEO Changpeng Zhao (CZ) took to Twitter to provide clarification on the data circulating and shed light on the situation.
CZ refuted the reported outflows as inaccurate and shared specific figures. According to Binance’s internal data, there was a net outflow of approximately $392 million between June 09 and June 10. He pointed out that some third-party analysis firms measure outflows by tracking changes in Asset Under Management (AUM) in USD equivalent, which includes the impact of cryptocurrency price drops. However, CZ emphasized that this approach may not accurately represent actual outflows and that it combines two distinct concepts.
To provide context, it is essential to consider data from DeFiLlama, a popular platform tracking decentralized finance (DeFi) protocols. DeFiLlama’s data shows a decrease in Binance’s total assets from $64.195 billion on June 5 to $55.69 billion currently. Additionally, Nansen, another analytics firm, supports this information by reporting Binance’s aggregated reserve balance as $54.5 billion.
It’s important to note that these figures are in USD equivalent, as Binance operates globally and serves users from various countries. The actual outflows and their impact may vary when evaluated in different currencies.
CZ also highlighted the impact of market fluctuations on AUM. On days with sharp price movements, such as the recent crypto market drop on June 10, arbitrage traders tend to move substantial amounts of funds between exchanges. This increased activity can create the appearance of greater outflows.
The discrepancies in reported data have raised concerns about the accuracy and transparency of information regarding outflows from Binance. As the SEC lawsuit unfolds, these issues will continue to be closely examined. The outcome of the legal proceedings holds significant implications for Binance and the broader cryptocurrency industry, potentially influencing future regulatory measures.
In response to the regulatory challenges posed by the SEC, Binance.US has made the decision to temporarily suspend USD deposits and notify customers about the upcoming pause of fiat (USD) withdrawal channels starting from June 13, 2023. This strategic move represents a shift towards becoming a crypto-only exchange, with a primary focus on safeguarding their customers and platform. Binance.US emphasized their commitment to maintaining 1:1 reserves for all customer assets, and any potential delays in withdrawals may be attributed to increased volumes and weekend bank closures.
