Binance, one of the largest cryptocurrency exchanges, has experienced a significant decline in users’ crypto assets following regulatory challenges in various jurisdictions. The latest proof of reserve snapshot taken on July 1 revealed that users’ Bitcoin deposits fell by 3.5% from 614,800 BTC recorded on June 1 to 592,450 BTC. This indicates that approximately 22,000 BTC was withdrawn from the platform during this period. Data from Glassnode, a data aggregator, supports these findings, showing a substantial decrease in Binance’s BTC exchange balance. The balance declined from a peak of 709,001 BTC on June 4 to as low as 651,275 BTC on June 23 before rising to its current balance of 657,536 BTC as of July 6.
Similarly, users’ Ethereum deposits on Binance decreased by 4.4% to 4.16 million ETH as of July 1 compared to the 4.35 million ETH held on June 1. This suggests that nearly 200,000 ETH was withdrawn from the platform over a 30-day period. Glassnode data also indicates that Binance’s ETH balance has been on a downward trend since May, coinciding with a period when the total number of ETH held across all exchanges reached a five-year low.
Decrease in Tether’s USDT and Increase in Binance’s BNB
Another notable decline in deposits occurred with Tether’s USDT stablecoin. The balance of USDT on Binance decreased by 1.61 billion, representing a 9.45% decrease, to reach 15.47 billion. On the other hand, Binance’s BNB balance defied the trend of decreasing deposits by increasing by 6.6% to 29.7 million BNB as of July 1. Additionally, other assets such as Ripple’s XRP and USD Coin (USDC) also recorded increased deposits.
The decline in users’ crypto assets on Binance can be attributed to the regulatory hurdles faced by the exchange in several jurisdictions. In June, the exchange encountered significant scrutiny from the United States, various European nations, and Nigeria regarding its activities. The U.S. Securities and Exchange Commission (SEC) accused Binance of violating federal securities law and offering crypto securities tokens to Americans. Despite Binance’s commitment to contest these allegations, CEO Changpeng ‘CZ’ Zhao views the lawsuit as more than a corporate legal battle. He sees it as an attack on the broader cryptocurrency industry.
As a result of these regulatory challenges, Binance lost its Euro payment partner in Europe and made the decision to exit several regional markets, including Austria, the Netherlands, Cyprus, and Germany. During these exits, French authorities conducted a raid on the exchange office in France, and a cease and desist order was issued against Binance in Belgium.
Binance’s regulatory challenges in various jurisdictions have led to a significant decline in users’ crypto assets, particularly in Bitcoin, Ethereum, and Tether’s USDT. However, Binance’s native cryptocurrency, BNB, has experienced an increase in deposits. These challenges highlight the increasing scrutiny faced by cryptocurrency exchanges and the potential impact on their users.