Between December 12 and December 14, traders withdrew US$6 billion. In response, Binance announced it will sell the remaining US$530 million worth of FTT, the currency produced by FTX. In November, the cache had a US$2.1 billion valuation.
According to the largest cryptocurrency exchange in the world, traders withdrew US$6 billion from Binance in three days as it reassured investors who were alarmed by FTX's bankruptcy that it had the funding to continue operating.
Without disclosing the amount of cash it possesses, Binance stated that the mass withdrawals that took place from December 12 to 14 were all honoured. The company also maintained that its financial status is stable and that it is not currently experiencing a liquidity problem.
The declaration marked Binance's first admission that there had been widespread withdrawals after its smaller rival FTX filed for bankruptcy on November 11. Tens of thousands of traders lost billions of dollars in cash as a result of the collapse of FTX, whose founders were charged with fraud and embezzlement. They were unable to get their money back after depositing it to trade cryptocurrencies.
With the values of major cryptocurrencies, including bitcoin, down by double-digit percentages from their peaks, the cryptocurrency world is in for a gloomy winter. After FTX collapsed under the weight of US$8 billion in deficits on its books and refused to honour trader withdrawals, the pressure increased.
Since then, the virus has spread to everything related to cryptocurrencies, driving down the value of tokens. Following the demise of FTX, a number of other cryptocurrency loan companies, including the Hong Kong-based Auros, as well as other trading platforms, have also closed their doors recently.
In a statement, Binance's founder and CEO Zhao Changpeng, also known as CZ in the cryptocurrency community, claimed that "a few bad incidents do not reflect the whole industry."
FTT, the currency created by FTX, which is still in Binance's ownership, will be sold for about US$530 million. According to Zhao's tweet, the cache was worth US$2.1 billion in November.
After the FTX collapse, worries about the reliability of other cryptocurrency exchanges were increased when Binance's auditing partner Mazars unexpectedly severed its relations with cryptocurrency clients. In the report, Binance stated that all bitcoin businesses are not the target of the action.
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