The crisis in crypto markets deepened after a major exchange saw investors pull out vast sums of money amid a growing panic about the state of the industry.
Binance, the world’s largest cryptocurrency exchange, saw more than £1.5billion worth of withdrawals on Tuesday, taking the total amount to £2.9billion over the last seven days.
It was the largest exit on the platform since June when the value of multiple cryptocurrencies crashed as fears around the global economy and higher interest rates sparked a flight from risky assets.
Binance, the world’s largest cryptocurrency exchange, saw more than £1.5bn worth of withdrawals on Tuesday, taking the total amount to £2.9bn over the last seven days
Binance ‘temporarily paused’ withdrawals of USDC, which matches the value of the US dollar, although the ability to take out money in the token was later restarted.
Binance boss Changpeng Zhao tweeted that the situation was ‘business as usual’ and the exchange had ‘seen this before’.
He added: ‘Tuesday was not the highest withdrawals we processed, not even top five.’
But the outflow highlighted nervousness that the bankruptcy of crypto exchange FTX and the arrest of its former boss Sam Bankman-Fried on fraud charges could trigger a wider sector.
While Binance has said it had assets of over £48billion, enough to cover withdrawals, it has not disclosed the amount it owes in liabilities, making it hard to get a complete picture of the state of its finances.
Concerns intensified after a Reuters report this week noted the US Department of Justice was mulling whether to file criminal charges against Binance following a probe into whether it has violated anti-money laundering laws.
FTX’s collapse has also thrown the issue of regulation into the spotlight. Yesterday, the Bank of England said tougher rules were needed.
Governor Andrew Bailey reiterated his scepticism about crypto assets, whose value has fallen from a peak of £2.4trillion a year ago to £650billion.
‘I’ve been very clear over the last four years – crypto doesn’t have intrinsic value and investors should be prepared to lose all their money,’ he said.
The Financial Stability Board signalled a global crackdown was coming, with watchdogs drawing up plans they hope to make law next year.
Greater scrutiny threatens to pile more pressure on the value of crypto firms and digital currencies, which are reeling from the FTX bankruptcy. Shares in Coinbase, a US crypto exchange, are down nearly 85 per cent this year.
Bitcoin, the world’s first and most valuable crypto, is down 74 per cent from its all-time high of around $69,000 last year. Yesterday it was $18,110.
Ethereum, hit a record high of $4,865 but since then has plunged by 73 per cent.
