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Binance Records $1 Billion in Outflows, Is Binance Too Big to Fail?

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Wed, 22/11/2023 - 10:44
Binance Records $1 Billion in Outflows, Is Binance Too Big to Fail?
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Without a doubt, Binance exchange is undergoing one of the most tumultuous periods in its history following the departure of its founder and former CEO, Changpeng "CZ" Zhao. Following the recent law enforcement debacle, crypto intelligence firm Nansen reported that the trading behemoth saw as much as $1 billion in net outflows.

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Exchange net flows can spark undue panic withdrawals when not properly curtailed. While exchanges cannot stop users from withdrawing their funds, consistently bad PR can exacerbate the situation across the board. 

One notable example in this regard is the implosion of the FTX Derivatives Exchange in November last year. At the time, Coindesk reported an imbalance in the firm's balance sheet, triggering an inquiry into the firm's due diligence with customer funds. The event at the time sparked a major bank run, marked by massive withdrawals that the exchange could not recover from.

Over the course of the past year, we have also seen similar implosions from regional banks in the U.S., including Silicon Valley Bank and Silvergate, among others. Now with Binance exchange under the radar, many in the industry are wondering if a similar fate is on the horizon for the firm.

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Will Binance crash?

One notable saying in the crypto ecosystem is that no entity is "too big to fail"; however, the odds against Binance are not grave enough to warrant this sort of outcome for now.

According to Nansen, despite the withdrawals, Binance still has as much as $64,666,583,162.30 as its networth. Data from CoinMarketCap also shows the exchange is still in the clear lead as the top platform per daily trading volume.

Per the data, Binance's current trading volume is pegged at $14,446,013,013.11, a figure that far outranks that of Coinbase, which stands at $2,348,962,093. With these figures and the confirmed 100% reserve for most of its supported assets, Binance May just be in business for much longer.

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