Binance CEO Says There’s No Way They’ll End Up Like FTX in Leaked Letter to Staff

The crypto alternate Binance, maybe the final main crypto alternate standing after the FTX debacle, skilled a wave of withdrawals by spooked traders earlier this week to the tune of practically $3.7 billion, in response to blockchain analytics agency Nansen.

The crypto firm now must reassure each its clients and its staff that every part will work out in the long term, regardless of the run on the crypto trade as a complete. In a letter to employees revealed by Business Insider, Binance CEO Changpeng Zhao, who typically goes by CZ, wrote that although the headlines definitely appeared dire, “we are in a strong financial position.” He later added “Binance will survive any crypto winter.”

He additional claimed that the corporate often processes greater than $1 billion in deposits or withdrawals day-to-day, and that they’ve sufficient in reserves to meet withdrawal requests. CZ had mentioned that they had seen much more withdrawals in the course of the Terra/Luna fiasco again in May, so $3.7 billion in per week is virtually nothing, proper?

Of course, this wasn’t the one concern analysts had with Binance. An alternate of Binance’s touted “proof-of-reserves” has been largely criticized for the way it didn’t reveal a lot concerning the alternate’s inside monetary controls. On Tuesday, the alternate quickly suspended withdrawals of the USDC stablecoin. Crypto customers are very jittery proper now since there have been loads of circumstances this yr the place an alternate advised customers it was “temporarily” halting withdrawals earlier than lastly closing up store, leaving customers bereft of their crypto.

But Zhao reiterated his firm’s earlier messaging that the alternate was merely changing its USDC to its native token BUSD “in order to retain large liquidity pools.” He added that the present processes his firm makes use of to transform tokens is “clunky” since they should undergo a New York-based financial institution utilizing precise U.S. {dollars}.

In a Twitter Spaces live chat Wednesday, Zhao mentioned that they had already seen the cash “flowing back” and that the withdrawals was “very normal market behavior.”

“While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it,” he mentioned in his letter to employees.

With the collapse of FTX and the top to Sam Bankman-Fried’s reign within the crypto sphere, there’s solely two large exchanges left which might be sufficiently big to essentially matter, that being Coinbase and—nonetheless the number 1 biggest exchange by buying and selling quantity—Binance.

Binance was within the thick of issues when FTX had lastly reached the purpose of no return. Zhao had initially introduced a tentative settlement to purchase up Bankman-Fried’s beleaguered alternate as soon as it turned clear that FTX’s had constructed its fortress on the unfastened sand of its personal native FTT token. After having a look at Binance’s inside funds, Zhao and co shortly backed out and labored to distance himself and his alternate from his erstwhile pleasant rival and FTX. Bankman-Fried has since been arrested and faces federal fees within the U.S. for mendacity to each traders and clients about how his firm allegedly abused customers’ funds.

Though there’s no proof to level to Binance making a number of the similar errors FTX did, the newest filings have revealed simply how deeply Bankman-Fried’s firm had been hit by the collapse of the Terra stablecoin earlier this yr, in response to fees filed by the Securities and Exchange Commission. It took till the alternate was underwater earlier than people bought to take an actual look beneath the alternate’s hood, so to talk. Without clear indicators every part’s A-okay, traders nonetheless appear to belief Binance with their crypto, however for the way lengthy?