Investors pulled up to $3 billion from Binance on Tuesday, according to blockchain analytics firm Nansen, which is the world’s largest cryptocurrency The stock market left investors nervous amid a barrage of negative industry headlines.
Andrew Thurman, content lead at Nansen, told CNN that at its peak, Binance saw “net outflows of up to $3 billion” in 24-hour periods. A report of an ongoing US Department of Justice investigation into the stock market is a factor in investors’ nervousness, he said.
“At the same time, it was discovered that a major market maker, Jump, has been making massive no-deposit withdrawals from Binance over the past few weeks — which ultimately appears to have caused concern among both retail and institutional users,” Thurman said. “In short, there’s a lot of money coming out, and that scared some people.”
Jump Crypto is part of the Jump Trading Group, a quantitative trading firm.
Earlier Tuesday, Binance had already posted its “highest daily withdrawals since June.” according to Nansen’s analysis. The withdrawal rate has since stabilized on net outflows of about $79 million, the company’s data showed Tuesday night ET.
Investors in the industry, already grappling with the “crypto winter” sparked by the collapse of Terraform Labs in May, are dealing with a major blow from the fall of crypto exchange FTX, which filed for bankruptcy in November registered. Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas this week after US prosecutors filed criminal charges against him.
Binance was also in the headlines. On Monday, Reuters reported, citing unidentified sources, that US prosecutors are considering closing a money laundering investigation into Binance by “filing criminal charges against individual executives, including founder Changpeng Zhao.”
The US Department of Justice did not immediately respond to a request for comment outside of US business hours.
In a statement to CNN, Binance said, “As has been widely reported, regulators are conducting a comprehensive review of every crypto company.”
“This burgeoning industry has been growing rapidly, and Binance has demonstrated its commitment to security and compliance by investing heavily in our team and the tools and technology we use to detect and defend against illegal activity,” added a spokesperson.
Zhao confirmed the outflow situation on Tuesday, tweet that Binance had seen “some withdrawals” of around $1.1 billion at one point.
“We’ve seen this before. Some days we have net withdrawals; Some days we have net deposits. Business as usual for us,” he wrote.
In his Twitter post, the billionaire tried to strike a bullish note by suggesting that it would be “a good idea” for any crypto exchange to “stress test” withdrawals in general. He later added that Tuesday’s outflows were not among the highest the company had processed.
In a statement to CNN, Binance added, “Binance user assets are all 1:1 secured and Binance’s capital structure is debt-free.”
Binance initially offered to bail out smaller competitor FTX before going out of business last month.
On Tuesday, Bankman-Fried was charged with eight felonies in the United States, including wire fraud and conspiracy. Separately, US market regulators accused Bankman-Fried of defrauding investors and customers.
Bankman-Fried, known as “SBF,” is a crypto celebrity who became an overnight outcast when his company suffered a liquidity crisis and filed for bankruptcy last month, leaving at least a million depositors without access to their funds.
– CNN’s Matt Egan and Allison Morrow contributed to this report.