Binance is Fucked
In a year that has seen the collapse of stablecoin Terra, hedge fund Three Arrows Capital, lender Celsius and FTX, among others, could Binance be next?
Crypto is flowing out of Binance as users withdraw from the exchnage
A long-running U.S. criminal investigation is a catalyst for withdrawals
Binance is participating in misdirection and manipulation of narratives
The Binance BUSD stablecoin has seen a ridiculous uptick in activity
The largest cryptocurrency casino of all time, Binance, is starting to show cracks as crypto winter sets in.
The blockchain does not lie. Analytics firm Nansen has reported that outflows of Ethereum-based tokens, which make up the majority of Binance’s trading volume, have been at their highest since June.


In the past week, Binance users have pulled over $3.6 billion from the exchange.
Criminal Investigation
What is sparking these outflows? An in-depth Reuters report goes into a lot of details regarding Binance’s woes.
Founded in 2017, Binance was apparently a target of law enforcement in the U.S. starting in 2018 according to the article. That’s four years worth of investigating going on.
Brazen disregard of rules many other cryptocurrency exchanges adhere to, including collecting identifying information about customers, has led many bad actors to use Binance.

That’s what got the exchange noticed by the authorities. Oh, and the fact that Binance has no geographical base of operations... hmm...
Purposely Withholding
Another red flag about Binance is when you spend any time interacting with them (and I did as a reporter at CoinDesk), you don’t ever get a straight answer from them.
It’s always been about sticking to whatever the Binance narrative is dictated by its CEO, CZ. Ask him a question, and in return you’ll recieve his classic word salad response.


Take this recent Decrypt article about CZ’s U.S. travel in the face of the criminal investigation - “he’s been there but doesn’t want to make a big deal about it”. Or that the company is Caymens-registered but the info will “be updated shortly”.
Misdirection city!
Regulators are taking notice of this type of behavior. Incoming U.K. Financial Conduct Authority (FCA), Ashley Alder, recently commented about FTX being “deliberately evasive”.
That’s the same playbook Binance is working off of!
Stablecoin Weirdness
One thing I’ve learned to do when things get really weird in the crypto markets: Pay attention to what is happening with the stablecoins. Binance has its own stablecoin, BUSD, which is administered by U.S.-based Paxos.
Data from Glassnode shows that this week was the highest amount of blockchain activity for BUSD as far as the data goes back. You can see there’s a spike during the Terra fiasco in May.
But that’s nothing like what’s been happening with BUSD recently - a record $17 billion in on-chain transfer volume on December 13.
Endgame
Amid all of this, CZ goes on CNBC, and puts on an award-winning performance. Demand for USDC stablecoin withdrawals on Binance has required a “token swap” that caused USDC withdrawals to be suspended because “the banks were closed”.

Does this really sound like a well-run company CEO that has his shit together? Not at all. It’s more like someone fumbling around trying desperately to remain in control of a collapsing situation.
A potential $2.1 billion clawback from the FTX fiasco hangs in the balance for Binance, which could really test its financial soundness. In addition, Binance’s own auditor for its proof-of-reserves has quit working with crypto companies.
Not long ago CZ was raising money for a fund to bail out crypto companies post-FTX. Now it seems more likely Binance may eventually become collateral damage itself.
Stay tuned.
Dis is fud broskis
Great article. Makes me wonder is there a centralized exchange that is not corrupt? Where does Coinbase stand in all of this?