- A few hours before the United States Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, the exchange processed $850 million in withdrawals.
- After the announcement another $63 billion USD worth of cryptocurrencies left the exchange.
Research by Thanefield Capital found that Binance, the largest cryptocurrency exchange currently, processed substantial fund withdrawals just hours before the indictment by the US Commodity Futures Trading Commission (CFTC) occurred.
For those who might have missed it, On Monday, March 27, the CFCT issued a lawsuit against Binance and its CEO, Changpeng Zhao, alleging that the crypto exchange violated specific trading and derivatives rules.
As expected, panic ruled the crypto market and there were outflows of funds from the crypto exchange, as well as sales that pushed down the price of cryptocurrencies such as Bitcoin (BTC).
However, the detail of interest is that, according to the investigation, Binance processed $850 million USD in withdrawals in the hours leading up to the announcement.
1.5 MMDD left the crypto exchanges
The researchers found by analyzing the data that during the 12 hours prior to the CFTC announcement a number of centralized crypto exchanges withdrew $1.5 billion. Of which, almost half came out of Binance. During the hour after the announcement, Binance processed another US$240 million in withdrawals.
“This aligns with the rumors leading up to the event that something significant was going on, as evidenced by the massive movement of stablecoins off exchanges.the researchers noted on Twitter.
They also wondered ifCould these large transactions have been a warning sign of the upcoming prosecution against Binance?”.
Despite the withdrawals, the Nansen data show that Binance still has approximately $63 billion USD worth of cryptocurrency.
Not the first test facing Binance
Yes, a significant amount of funds were withdrawn from the crypto exchange. Nonetheless, Binance has seemed to be able to withstand similar blows in the past.
In fact, according to yahoo financea Binance spokesperson explained to Gizmodo that “the withdrawals we have seen in the last few days have been significantly lower than in other periods of negative news.”
The spokesperson assured that the business model used by the crypto exchange is based on keeping assets in custody and generating revenue solely through transaction fees.
Regarding what will happen next with Binance, Changpeng Zhao answered to the CFTC’s demand, assuring that “Binance.com does not trade for profit or ‘manipulate’ the market under any circumstances”.