Binance Hit by Over $1 Billion Outflows After CEO Changpeng Zhao's Exit

By Jace Dela Cruz

Nov 23 2023, 01:36 AM EST

Binance is grappling with substantial outflows totaling over $1 billion in the last 24 hours, exclusive of bitcoin, according to blockchain analysis firm Nansen.

It follows the departure of Binance founder and CEO Changpeng Zhao and his guilty plea to the Department of Justice. The exit of funds also coincides with a 25% decline in liquidity, with market makers scaling back their positions, according to data provider Kaiko, as CNBC reported.

Binance Founder Changpeng Zhao Apologizes, Accepts 'Full Responsibility' in Letter to Judge Ahead of Sentencing — Binance founder and former CEO Changpeng Zhao has publicly apologized for his past actions and "poor decisions" ahead of his sentencing. PATRICIA DE MELO MOREIRA/AFP via Getty Images

Over $1 Billion Outflows of Binance

These significant outflows mirrored a prior occurrence when Binance and its founder faced charges of 13 securities violations by the SEC. The exchange's native token, BNB, has experienced an 8% decrease in the last 24 hours.

Nansen estimates that Binance holds approximately $2.8 billion worth of BNB tokens. Earlier in March, the exchange witnessed a decline in its share of all spot trading after discontinuing zero-fee trading for crypto asset pairs, including bitcoin.

Despite the challenges, Binance is still the world's largest cryptocurrency exchange, which processes billions of dollars in trading volume annually. The recent developments include a $4.3 billion fine settlement with the US government, marking the conclusion of a lengthy investigation into the crypto exchange's operations.

According to Nansen, assets exceeding $65 billion still reside on the Binance platform, indicating that the exchange is sufficiently capitalized to endure a potential surge of investors withdrawing from the platform.

A Positive For the Industry?

Grzegorz Drozdz, a market analyst at investment firm Conotoxia Ltd., told CNBC that apart from the BNB token experiencing a loss of over 9%, most assets have not been significantly impacted.

He suggested that the resolution of the dispute with regulators could be a net positive for the industry, especially as Binance has committed to enhancing security measures.

Drozdz also highlighted the potential positive impact on the crypto market in the long term, particularly with the anticipated approval of a bitcoin-based ETF and the regulatory issues behind Binance.