Amidst revelations of the CEO Changpeng Zhao admitting culpability to criminal charges, Binance, renowned as the globe’s largest cryptocurrency exchange, witnessed a pronounced surge in withdrawal activities.
As per DefiLlama data, the 24-hour outflows from Binance surpassed the $1 billion mark at 3:30 p.m. Hong Kong time on Wednesday. Notably, the exchange encountered a net outflow totaling $703.1 million over a week.
Broken down, a substantial portion of the outflows, amounting to $605.9 million, traversed through the Ethereum, BNB -8.80% chain, Avalanche, Fantom, and Polygon networks, as indicated by separate data consolidated by Nansen.
These withdrawals transpired subsequent to the acknowledgment of guilt by Binance’s co-founder, Changpeng Zhao, on Tuesday, for violating the Bank Secrecy Act, leading to his resignation as the company’s CEO. The newly appointed CEO is Richard Teng.
As part of the plea agreement, Zhao consented to a $50 million fine, while Binance, in a parallel settlement, agreed to pay a substantial $4.3 billion fine. This encompassed admissions of guilt for multiple charges, including money laundering, conspiracy to conduct an unlicensed money transmitting business, and sanctions violations.
In contrast, OKX experienced a notable influx of $152 million within the past 24 hours, securing the top position in daily inflows, trailed by Bybit’s $50.9 billion and Bitstamp’s $30.5 million, according to DefiLlama.
Binance’s native token, BNB, witnessed a decline of 9.1% in the past 24 hours, trading at $234.3, according to CoinGecko.
Jason Atkins, the chief commercial officer of crypto market maker Auros, conveyed insights to The Block, stating that the market sentiment is subject to a second-order effect due to developments like the Department of Justice’s fines on Binance. Such incidents are indicative of various regulatory bodies’ stances on historical infractions. Atkins foresees an accelerated outflow of projects, exchanges, founders, and firms from direct U.S. regulatory scrutiny. Compliance, he asserts, will now become non-negotiable to minimize lapses in Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements in the U.S., regardless of the country of incorporation.
Despite the substantial setback faced in its U.S. operations, Binance has proactively outlined a vision for its future. In a blog post released on the same day, the company admitted shortcomings in its compliance controls during its initial launch. It emphasized two years of concerted efforts to restructure organizational and personnel aspects, along with system upgrades.