Following the plea deal entered into by its CEO, Changpeng Zhao, who pleaded guilty to criminal and civil charges in the US, crypto exchange Binance saw its withdrawals increase precipitously, according to reports on Wednesday. As part of the plea deal, the company will also face more than $4 billion in fines.
Over the past 24 hours, the exchange has seen over $1 billion in outflows not including bitcoin transactions, according to market data. The company’s liquidity fell 25% over the same period, according to market data firm Kaiko, as investors withdrew from their positions.
CoinGecko data showed that the native token of the exchange, BNB, dropped more than 9% of its value over this period. According to blockchain analysis firm Nansen, the exchange holds about $2.8 billion in BNB tokens.
Although not insignificant, the outflows must be compared to the assets worth over $65 billion which remain on the exchange, which would indicate that although outflows were significant, there was not a “mass exodus” from the exchange. Experts indicated the exchange was in no danger, and was likely “capitalized enough to withstand” the withdrawal from investors which was produced by the present circumstances.
Grzegorz Drozdz, a market analyst at investment firm Conotoxia Ltd said, “After the momentary shock of the agreement with the announcement, there is no significant impact on most assets.”
He added, “Of the top 100 cryptocurrencies, as many as 98 have seen a noticeable rebound over the past 24 hours. Bitcoin, meanwhile, fell 4% before rebounding and remaining with a loss of 1.3%.”
Earlier in the week it was announced that Binance, and CEO Zhao, had struck a deal brokered with the US Department of Justice and other regulators in which he would acknowledge there had been violations of anti-money laundering requirements at the exchange and he would plead guilty to various criminal and civil charges, as well as step down from leading the exchange. In addition he and the exchange would agree to pay $4.3 billion in fines, made up of a $2.5 billion forfeiture, and a fine of $1.8 billion.
