A recent analysis by blockchain firm Ransen has revealed that crypto exchange platform Binance recorded a massive withdrawal of funds from investors in the past few weeks.
On Tuesday, the platform registered withdrawals of $1.9 billion, the largest of such outflow since June. Analyst at Nansen, Andrew Thurman disclosed that the criminal investigation by the U.S. Department of justice on Binance was a major factor that caused panic among investors.
The charges under investigation are unlicensed money transmission, money laundering conspiracy, and criminal sanctions violations.
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Recall that the U.S department of justice in 2018 had begun an investigation into Binance’s compliance with anti-money laundering laws and sanctions.
After a thorough investigation of Binance’s financial crime compliance of 2022, reports revealed that Binance kept weak anti-money laundering controls, processed over $10 billion in payments for criminals and companies seeking to evade U.S. sanctions, and plotted to evade regulators in the United States and elsewhere.
The crypto exchange platform however debunked such claims, noting that it is hell-bent on driving higher industry standards, as it seeks to further improve the platform’s ability to detect illegal crypto activity.
Binance CEO Changepeng Zhao while speaking in a recent conversation on Twitter spaces, disclosed that the platform has begun to witness an increase in the inflow of funds, noting that the massive withdrawal previously recorded was normal market behavior.
He further stated that people were down in the crypto sector following the collapse of FTX in November.
He said, “If you get hurt by one bank, you’re going to think all the other banks are bad. The fact is just because one bank is bad doesn’t mean all the other banks are bad.”
Meanwhile, analysts disclose that if the investigation by the U.S department of justice goes against Binance, it could loosen the platform’s grip on the industry.
On the other hand, the recent collapse of FTX which filed for chapter 11 bankruptcy protection on November 11, 2022, has no doubt negatively impacted the crypto industry.
Binance had initially offered to help bail out the rival exchange platform, before pulling out of the deal last month, citing issues beyond its control.
The FTX collapse has raised investors’ concerns, which have led to the massive withdrawal of funds, therefore plummeting the price of Bitcoin which is currently trading at $17,518, a decline of more than 60% year-to-date.
It has also affected the valuation of some companies with several others contemplating filing for bankruptcy. The CEO of FTX Sam Bankman-fried who was recently apprehended in the Bahamas faces possible extradition to the U.S.
According to some investors and crypto experts, they have disclosed that the former crypto billionaire should be ready to spend a long time in jail following his fraudulent act.