REUTERS/Darrin Zammit Lupi
- Shortly after jittery investors withdrew over $1 billion from Binance on Tuesday, its CEO sent a memo to staffers.
- Changpeng “CZ” Zhao seemed to try to assuage market fears amid the implosion of crypto peer FTX.
- In the memo, CZ wrote Binance expects “the next several months to be bumpy.”
On Tuesday, jittery investors withdrew more than $1 billion from Binance, the world’s largest crypto exchange. Hours later, the company’s CEO, Changpeng “CZ” Zhao, sent a memo to staffers where he seemed to try to assuage market fears in the aftermath of the implosion of crypto peer FTX.
“Binance will survive any crypto winter,” CZ wrote in the memo.
Tuesday’s withdrawals marked the biggest single-day withdrawal the exchange had seen since June, per blockchain research group Nansen.
Publicly, CZ appeared to shrug off concerns about customers withdrawing funds, tweeting on Tuesday: “We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.”
—CZ 🔶 Binance (@cz_binance) December 13, 2022
But in the memo to staff, CZ wrote that Binance expects “the next several months to be bumpy.” He added that the company will “get past this challenging period.”
In the memo, CZ also seemingly referred to the troubles plaguing crypto peer FTX and its founder and ex-CEO Sam Bankman-Fried — who was arrested in the Bahamas Monday — writing: “With all that is going on, we know that we are at a historic moment in crypto. Rest assured, this organization was built to last.”
Binance declined Insider’s request for comment for this story.
Read the full memo Changpeng “CZ” Zhao sent to staff on Tuesday.
You may have seen some of the latest news regarding Binance. The fallout from the FTX implosion has brought with it a lot of extra scrutiny and tough questions. The good news is that, even though the news stories don’t always reflect it, we can answer the tough questions thrown at our business.
For example, despite today’s news regarding withdrawals, we are in a strong financial position. We often process more than $1b in deposits or withdrawals on a daily basis. So, it’s nothing unusual today. User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free. We maintain hot wallet balances to ensure that we always have more than enough funds to fulfill withdrawal requests and we top up hot wallet balances accordingly.
With regard to questions on the temporary halt of withdrawals of USDC, because we auto convert USDC to BUSD in order to retain large liquidity pools, we generally retain USDC deposits for future withdrawals. In today’s case, many people deposited BUSD or USDT to withdraw USDC. When this happens, we need to convert. Our current conversion channels are clunky. We have to go through a bank in NY in USD, which is slow. We will improve this going forward.
With all that is going on, we know that we are at a historic moment in crypto. Rest assured, this organization was built to last. As long as we continue to offer users the best product, user experience, and frictionless trading environment – Binance will survive any crypto winter.
While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it. As always, I’m grateful to each of you for your incredible dedication and hard work and I’m proud of the incredible business we’ve built together.