Only 11 days in all of history have seen a larger outflow of bitcoin from the platform.
So far, all Binance operations are running smoothly.
Yesterday, June 5, the US Securities and Exchange Commission (SEC) filed a lawsuit against the Binance cryptocurrency exchange. Since then, 10,500 bitcoins (BTC) have been withdrawn from the exchange.
As CriptoNoticias detailed it, SEC Charges Exchange Led by Changpeng Zhao of alleged regulatory breaches. There is a fear, among Binance users, that the Justice will request a blocking of funds.
However, as can be seen in the information Shared by analytics firm, Glassnode, that Binance is still holding 694,000 BTC, which is just 10,000 BTC below its all-time high of 704,500 BTC. For Glassnode, it can be concluded “that the recent wave of departures has only marginally affected the balance held on the platform”.
At the time of this publication, there is no problem to trade on Binance. Both deposits and withdrawals, as well as all trading operations are enabled. On the exchange’s side, they have responded that they will defend themselves “vigorously” against the SEC’s accusations.
In addition, Binance argues that they have always collaborated with regulators in various parts of the world to be in good standing where they provide service. In the case of the United States, this meant that Binance.us was created in 2019. It is a parallel platform, registered as an independent company of the global exchange, in that North American country.
Memories of FTX and a top bitcoiner
Something that can exacerbate the desire to withdraw funds from Binance in the current situation, are the memories of the not so distant FTX case. In 2022, this cryptocurrency exchange entered a financial crisis and prevented its clients from withdrawing their funds (a situation that continues to this day). Celsius, a lending and investment platform, is another company that experienced a similar situation.
This environment of uncertainty is combined with a popular maxim among bitcoiners: “if they are not your keys, they are not your coins”. This proverb refers to the principle that if you do not have direct control of the private keys (code that allows you to sign transactions on the Bitcoin network) then, effectively, you do not have real control over those BTC.
When users deposit their coins on an exchange like Binance, they trust that the exchange will keep those keys safe and allow them to access their funds whenever they want. But, if an exchange shuts down, freezes, or is otherwise prevented from operating, users may discover that, although the coins on the platform are in their name, they cannot access or use them.
In this way, some Binance users could be withdrawing their funds as a precaution, given the possibility that the legal problems of the exchange could lead to a situation in which they cannot access their bitcoins. While it is true that the amount withdrawn is, for now, only a small fraction of the total funds on Binance, the situation could change quickly if more users decide to act on the bitcoiner max.