Good day everybody,

Welcome to CryptoGod-1's blog on all things crypto. Today I will be doing a write up regarding an interesting article I came across relating to the recent wave of withdrawals on the Binance Exchange. Their CEO, Changpeng "CZ" Zhao, has since sent a memo to all staff on Tuesday the 13th of December 2022, outlining his thoughts on what is happening.

The $3.6 billion Withdrawals

It has been a tough time for CEX's throughout 2022, with Gemini, Celsius, FTX, and now seemingly Binance in the spotlight for all the wrong reasons. As the world's largest cryptocurrency exchange, many are fearful of what could happen if Binance were to become the next FTX. Following their disclosure of assets and reserves, which did not allay the fears, customers have withdrawn a total of $8.78 billion out of the crypto exchange, while $5.12 billion has flowed into company.

As shown in the Tweet below from Nansen Explorer which provides analytics for Crypto, the levels of Outflow from the exchange are far outweighing the levels of Inflow in the previous week.

Despite these alarmingly high levels of withdrawals, Binance still holds about $58.9 billion in assets, and CZ has shrugged off any any concerns about customers withdrawing funds, stating that those were not even the highest levels of withdrawals Binance has had to deal with, citing the previous disasters of LUNA and FTX crashes:

Memo Time

Below is a copy of the memo which CZ has sent out to all his team members on Tuesday the 13th of December 2022 to try alleviate the fears surrounding the worlds largest CEX following the knock on effect and FUD from the FTX crash.

"Team: 

You may have seen some of the latest news regarding Binance. The fallout from the FTX implosion has brought with it a lot of extra scrutiny and tough questions. The good news is that, even though the news stories don't always reflect it, we can answer the tough questions thrown at our business. 

For example, despite today's news regarding withdrawals, we are in a strong financial position. We often process more than $1b in deposits or withdrawals on a daily basis. So, it's nothing unusual today.  User assets at Binance are all backed 1:1 and Binance's capital structure is debt free. We maintain hot wallet balances to ensure that we always have more than enough funds to fulfill withdrawal requests and we top up hot wallet balances accordingly. 

With regard to questions on the temporary halt of withdrawals of USDC, because we auto convert USDC to BUSD in order to retain large liquidity pools, we generally retain USDC deposits for future withdrawals. In today's case, many people deposited BUSD or USDT to withdraw USDC. When this happens, we need to convert. Our current conversion channels are clunky. We have to go through a bank in NY in USD, which is slow. We will improve this going forward.

With all that is going on, we know that we are at a historic moment in crypto. Rest assured, this organization was built to last. As long as we continue to offer users the best product, user experience, and frictionless trading environment – Binance will survive any crypto winter.

While we expect the next several months to be bumpy, we will get past this challenging period – and we'll be stronger for having been through it. As always, I'm grateful to each of you for your incredible dedication and hard work and I'm proud of the incredible business we've built together.  

CZ"

 

Is Binance really secure?

Nobody can deny the crypto space has taken a huge hit over the past year with many selling their crypto for a loss or even losing access to it altogether with the likes of FTX collapsing before their eyes. Binance has always credited itself as the largest cryptocurrency exchange around and although there are troubles plaguing crypto peer FTX and its founder and ex-CEO Sam Bankman-Fried who was arrested on Monday, Binance is not looking likely to follow the same route. CZ acknowledged the levels of FYD surrounding the space in a post on Twitter, even claiming he is more than happy to recommend Trust Wallet for those who wish to hold their own crypto in a private wallet. While we all know shady things happen in the background of every business, and I am sure Binance is no different, it also has a level of stability and dominance which none other can match in the crypto space. 

Therefore it seems unlikely that CZ or Binance would be in a position where they would be risking the long-term viability of the business, even though we have seen similar happen at FTX. They led the way in offering to prove to its customers and the broader market that it has the assets it says it does after the FTX crash, and they even performed a “Merkle tree” proof-of-reserves audit. The breakdown of Binance’s assets and liabilities actually showed a hole of $245 million, however this was explained off as collateral for lent out Bitcoin. Some may be sceptical about this, but when you compare it to the level of liabilities that FTX had then it is not even close. To add another spanner in the works, on Monday the 12th of December 2022 it was reported by Reuters hat the US Department of Justice has been investigating Binance over money laundering violations totalling around $10 billion worth of payments processed in 2022. While it seems like a substantial amount, when put into the scope of the sheer size of transactions which Binance processes then the reality of it becomes apparent. The DOJ is yet to make any final charging decisions but could bring indictments against Binance and top execs, negotiate a settlement, or close the case. A spokesperson for Binance, who would not go into detail on the claims, said:

"As has been reported widely, regulators are doing a sweeping review of every crypto company against many of the same issues"

Interesting times for sure, but I for one am confident in Binance above all other CEX's and that they can overcome whatever is thrown at them. Only time will tell.

Have a great day.

Peace. CryptoGod-1.

Referral links:

Publish0x - https://www.publish0x.com/?a=olejZqrzej

Splinterlands - https://splinterlands.com?ref=rnabc1

Upland - r.upland.me/NQAH

Binance - https://accounts.binance.com/en/register?ref=143611368

NFT Market Sales

Opensea - https://opensea.io/RNabc

Follow Me :)

Twitter - @RNabc123