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Binance Shifts Funds Pre-Settlement, Faces Nearly U$1 Billion Outflows
- Just days before Binance’s settlement with the DOJ, a Binance cold wallet executed the 8th largest USDT transaction on the TRON blockchain, transferring US$ 3.9 billion.
- Despite Binance’s significant cold wallet holdings, concerns persist over its ability to meet a US$ 4.3 billion settlement and handle ongoing SEC charges, amid US$ 956 million in investor withdrawals and Changpeng Zhao’s legal challenges.
- Richard Teng, Binance’s new CEO, assures that despite challenges, the exchange remains the largest globally, operates debt-free and maintains strong fundamentals with solid revenues and profits.
8th Largest Transaction Days Before Settlement
Binance and its former CEO Changpeng “CZ” Zhao have been in the headlines quite a bit in recent days over the settlement between the Department of Justice (DOJ) and Binance for violating U.S. anti-money laundering requirements. In light of this development, it is worth looking at some transactions that have occurred prior to this.
Blockchain intelligence firm ChainArgos reports – in what turns out to be the 8th largest USDT transaction on blockchain TRON (TRX) – that US 3.9 billion (AU$ 5.95 billion) had been transferred from a Binance cold wallet on November 10.
According to a Binance blog post, Binance has several cold wallets where it stores the majority of its funds in networks like Bitcoin (BTC), Ethereum (ETH), BNB (BNB), Tron (TRX) and stablecoins.
The transfer happened exactly 12 days before the settlement with the DOJ, for a similar sum even. A coincidence perhaps, the transfer amount and timing nevertheless raise questions.
Binance Not Out of The Woods Yet?
Despite the large holdings Bianance is apparently storing in cold wallets, doubt remains if Binance can pay its dues. Investors withdrew approximately US$ 956 million (AU$ 1.45 billion) from Binance in 24 hours following news that CZ stepped down and faces prison time.
Binance agreed to a settlement involving a US$ 4.3 billion (AU$ 6.5 billion) payment to U.S. authorities, raising concerns about the future of the world’s largest crypto exchange. Zhao, replaced by Richard Teng, a senior executive at Binance, was involved in a deal that may not resolve the exchange’s legal issues in the U.S., with unresolved SEC charges alleging violations of U.S. securities laws.
Robert Le, crypto analyst at data firm PitchBook, said
Binance is not entirely out of the woods. The ongoing civil lawsuit with the SEC remains a concern for the exchange, which (is) likely to result in further fines.
Robert Le Despite investor concerns indicated by the withdrawals, Binance still holds over US$ 65 billion (AU$ 99 billion) in assets. Zhao, who paid a $175 million bail bond and has US$ 15 million (AU$ 22.9 million) in a trust account, agreed to return to the U.S. 14 days before sentencing, with prosecutors emphasising the risk of flight and the need to ensure his return for sentencing.
New CEO Assures Funds Are SAFU
Richard Teng, the new CEO of Binance, has a positive outlook, maintaining that the exchange is still the largest worldwide and has a debt-free capital structure.
The fundamentals of our business are very strong. Binance continues to operate the world’s largest crypto exchange by volume, our capital structure is debt-free, our expenses are modest, and we have solid revenues and profits despite the low fees we charge our users.
Richard Teng 
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
