Digital Assets: Troubles Mount At Crypto Giant Binance

March 29, 2023 | Digital Assets, News

Binance is facing a perfect storm as withdrawals top $2 billion.

Binance, the world’s largest cryptocurrency exchange, is facing mounting problems as traders pull billions of dollars from the platform. The Commodity Futures Trading Commission (CFTC) recently sued the company, alleging that it operated unlawfully in the US and violated rules designed to prevent illegal financial transactions.

Software glitches also forced the crypto exchange to temporarily suspend spot trading. According to Nansen, a provider of cryptocurrency data, the exchange has suffered a net outflow of $2.1 billion on the Ethereum blockchain in the past week. Nansen said the scale of withdrawals saw an uptick after the CFTC action. (WSJ)

The decision by the crypto exchange to bring back trading fees likely contributed to a decline in its spot market share, which declined to 30% on March 24 from 57% at the beginning of the month.

Additionally, a federal judge has blocked Binance.US’ bid to acquire Voyager Digital’s customer accounts in the latter’s bankruptcy proceedings while federal authorities oppose the deal.

Investors and analysts are keeping a close watch for any further regulatory actions that may be taken against the exchange in the United States or other jurisdictions.

Changpeng Zhao (CZ), the founder of the exchange, expressed surprise and disappointment over the CFTC complaint, while also stating that the exchange had been working collaboratively with the regulatory agency for over two years.

Some investors have withdrawn from Binance, worrying about the possibility of bank runs similar to the ones that caused the collapse of crypto exchange FTX and other lending platforms last year.

Related Story:  Bitcoin Down After The CFTC’s Legal Salvo Against Binance

Image of CEO CZ: Binance

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