Leading cryptocurrency exchange Binance has recorded over $3 billion in outflows over 24 hours as investors are pulling their funds off of the platform amid concerns it may not be able to honor withdrawals in case of a bank run.
According to data from Nansen the exchange has recorded its highest daily withdrawals since June, with the figure surpassing $3 billion, $2 billion of which were in the form of Ethereum-based tokens.
The withdrawals come after Binance was criticized for only showing “part” of its assets and liabilities in a proof-of-reserves and proof-of-liabilities verification report released over the past week, conducted by accounting firm Mazars’ South African affiliate.
Douglas Carmichael, an accounting professor at Baruch College and former chief auditor of the U.S. Public Company Accounting Oversight Board, said he “can’t imagine it answers all the questions an investor would have about the sufficiency of collateralization.”
Kraken CEO Jesse Powell also criticized the report, saying it features “interchangeable” assets, negative balances, and aggregation by “class.”
Former SEC enforcement chief John Reed Stark also weighed in, saying the report “doesn’t address the effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers. I worked at SEC Enforcement for 18+ yrs. This is how I define “red flag.” The report’s fine print clarifies it should not be considered an audit.
Also read: What is Binance’s Withdrawal Limit?
Users are moving funds off of Binance over these concerns as ahead of the collapse of FTX some were able to withdraw their funds before the exchange locked withdrawals. Many are now choosing to custody their own funds in a bid to avoid losing funds deposited in centralized third parties that collapse.
Notably, Nansen data shows Binance still has over $52 billion worth of digital assets in its wallets, with over 50% being in BUSD, USDT, and BTC.
Featured image via Unsplash.