Saturday, June 3, 2023

Crypto community members discuss bank run on Binance

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Within the past 24 hours, cryptocurrency exchange Binance has seen outflows of over $1.14 billion due to rising FUD — or fear, uncertainty and doubt — within the crypto ecosystem. 

According to Binance CEO Changpeng “CZ” Zhao, the exchange has seen this before, and he believes “it is a good idea to ‘stress test withdrawals’ on each CEX [centralized exchange] on a rotating basis”. 

The bank run on Binance comes a month after CZ triggered a bank run on FTX, which led to liquidity issues and its eventual collapse.

Despite the FUD rampant within the crypto community, many members remain optimistic that Binance will weather the storm and not share the same fate as FTX. Others are speculating that if Binance goes down, the entire crypto industry might be brought to its knees. 

Bitcoin (BTC) millionaire Carl Runefelt opined on Twitter that “If Binance collapses we’re all fucked.”

Author and Bitcoin enthusiast Layah Heilpern shared: “You realise if Binance goes down everything else will crumble? Yes #bitcoin will survive but the entire crypto ecosystem including stablecoins will die.”

Twitter user Crypto Cognac shared that Binance going down wouldn’t do the space any good, as it would send the space “back to the stone age.”

Timverse said they believe that if Binance became insolvent, it would “set the industry back” by years — though crypto would survive because it “has been here way before binance came to existence & it will be here thereafter.”

Crypto analyst and government adviser Del Crxpto accused crypto media outlets of promoting the FUD around Binance, sharing, “The media are trying to cause a bank run on binance. In the last several weeks they have attempted to push several narratives to this regards, with the latest being that binance did not pass an audit. The fact is, time is the #1 audit and binance has proven the test of time.”

Related: Abnormal token price movements on Binance not hack-related, confirms CZ

On Dec 11, Cointelegraph reported that Binance’s proof of reserves raised red flags for accounting and financial specialists and were been labeled “pointless” by rivals, as it failed to include liabilities.

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