Binance, the world’s largest cryptocurrency exchange, is now under intense scrutiny after the FTX debacle. Here are 5 things you need to know.

• Investors are worried that cracks are starting to appear on Binance after the shocking crash of FTX.
• The cryptocurrency exchange giant is facing questions about its reserves, and is under investigation by the Department of Justice.
• As the cryptocurrency market loses faith in the exchange, its CEO has warned employees of “bumpy” times ahead.

Customers drained billions of dollars from Binance’s crypto platform last week – just one reason why the company has been in the spotlight in the wake of the FTX implosion.

Terrified investors are on the alert for signs of trouble after the collapse of the now bankrupt FTX, the once $32 billion crypto empire founded by Sam Bankman-Fried. Some worry that cracks may start to appear on Binance.

Here are 5 things to know about what’s happening on Binance, and why it’s got the crypto community wondering.

People are concerned about what Binance has on customer funds

After FTX’s bankruptcy showed its coffers bare, crypto firms have come under pressure to show their customers’ holdings are secure and they can pay if there is a rush of withdrawals.

Moreover, Reuters reported that FTX’s Bankman-Fried quietly transferred at least $4 billion in user funds to sister trading company Alameda Research after it incurred losses.

Binance sought to boost confidence in its own business by obtaining a Proof of Reserves report. She hired the accounting firm Mazars to check her holdings, possibly to reassure clients that their money was still in their accounts and had not been loaned out.

But Legal experts And the others He said that platform users should not be satisfied with the Mazars report, as it did not look at how good the financial controls were. While it indicated that Binance’s position was strong, it also showed that Bitcoin liabilities were $245 million larger than assets, the WSJ reported.

Nearly half of the company’s $75 billion in reserves are in its stablecoin BUSD and native token (BNB), according to Bloomberg.

The accounting firm on Friday halted its proof-of-reserves work with Binance and other crypto clients “over concerns about the way the public perceives these reports,” the Financial Times reported.

Clients withdraw net $3 billion of funds within one day

Binance has seen massive withdrawals in recent days as questions build about its reserves and DOJ investigations. Meanwhile, the arrest of FTX founder Bankman-Fried further eroded confidence in cryptocurrencies.

On Tuesday, Binance recorded its highest daily withdrawals since June, with a net outflow of $3 billion in just 24 hours, according to Nansen data. The exchange was forced to temporarily freeze USD coin withdrawals while it boosted its holdings of the stablecoin.

Just over a month ago, the crypto giant held $69.5 billion worth of digital assets in publicly disclosed wallets, According to Nansen. She added that that total now stands at $54.7 billion due to large withdrawals and price volatility.

There is a Department of Justice investigation into Binance focused on money laundering

Adding insult to injury were reports that the US Department of Justice was investigating Binance for the company’s compliance with financial crime rules.

Prosecutors are considering whether to bring criminal charges against its founder Changpeng Zhao and other executives, according to Reuters. These include money laundering conspiracy, unauthorized money transfer, and criminal penalty violations.

Reuters calculated that Binance processed more than $10 billion in illegal payments in 2022 and said it tried to evade regulators. The crypto giant is disputed.

Binance CEO “CZ” isn’t upset and says it’s business as usual

Zhao, better known as “CZ”, has doubled down on efforts to try to ease clients’ concerns about Binance’s liquidity. he is Pay for retreat Against what he sees as “Food” – the spread of unfounded fear, uncertainty and suspicion.

“People can withdraw 100% of the assets they have on Binance. We will have no problem on any given day,” he told CNBC on Thursday. “Crypto companies have to hold user assets face-to-face, and that’s what we do.”

Earlier in the week, Zhao dismissed the exchange’s large outflows as “business as usual.” And after Binance lifted the freeze on USDC withdrawals, the events were hailed as a credibility build “stress test” of the flexibility of the stock market.

But he warned Binance employees that the road ahead is “bumpy”.

While Zhao downplayed the concerns, the issues remained. The young billionaire told staff that FTX’s woes have put “a lot of extra scrutiny and tough questions” on Binance, which needs to get through a crisis of confidence.

“While we expect the next several months to be bumpy, we will get through this difficult period — and we will be stronger because we have made it through,” he said in a note seen by Bloomberg.