Binance’s Bitcoin Reserves Drop by $200 Million Following Guilty Plea
After Binance and its former CEO Changpeng Zhao pleaded guilty to federal charges in the US, the cryptocurrency exchange’s Bitcoin reserves have been reduced by $200 million. Despite CZ paying his bond, prosecutors are seeking to keep him in the US until sentencing.
Bitcoin Moving from Binance to Coinbase
According to on-chain data from CryptoQuant, Bitcoin is being transferred from Binance to Coinbase. The research firm discovered that Coinbase’s reserves decreased by 5,000 BTC while Binance’s increased by approximately 12,000 BTC. Analysts attribute this movement to individual investors withdrawing their funds from Binance due to legal concerns.
Retail Investors Shifting Funds Away from Binance
Analysts at CryptoQuant believe that retail investors are moving their money away from Binance and onto compliant or licensed exchanges. This shift is causing Binance’s Bitcoin reserves to decrease. Greta Yuan, head of research at VDX, notes that lingering apprehension in the market has led users to seek reassurance by moving their funds to regulated platforms.
“The decrease in Bitcoin reserves on Binance appears to be a result of retail outflows,” Bradley Park wrote in a note.
Binance Accused of Using Bitcoin Reserves for Token Support
The US Securities and Exchange Commission (SEC) and cryptocurrency commentators claim that Binance has used its Bitcoin reserves to support the value of its own token, BNB. Both CZ and Binance deny these allegations. Nansen, a blockchain company, reports over $1 billion in withdrawals from Binance in a single day following Zhao’s resignation and guilty plea.
$4.3 Billion Settlement and Impact on BNB
Binance reached a $4.3 billion settlement with the US Department of Justice (DOJ), including a $1.8 billion fine and $2.5 billion forfeiture. As a result, BNB’s value dropped by 14%, from $264 to $227. Currently valued at $233, it has decreased by 20% compared to the previous year.
Possible Detention for CZ
US prosecutors are pushing for the detention of Changpeng Zhao within the country instead of allowing him to return to his residence in Dubai until his sentencing in February. Due to his involvement in failing to implement proper anti-money laundering measures, he could face up to 18 months in prison.
Hot Take: Binance Faces Consequences as Investors Seek Reassurance
The guilty plea and legal challenges faced by Binance have resulted in significant consequences for the exchange. With Bitcoin reserves decreasing, withdrawals surpassing $1 billion, and market liquidity dropping, investors are shifting their funds away from Binance towards compliant and licensed platforms. The $4.3 billion settlement and CZ’s potential detention further add to the uncertainty surrounding the exchange’s future.
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