Binance Bombarded With Customer’s Withdrawal Requests
Binance is currently dealing with a situation that the leading crypto derivative firm hadn’t ever expected.
It is currently being bombed with a high number of crypto withdrawal requests sent to it by its customers globally. The volume of withdrawal requests is such that the firm has been unable to handle the load.
The majority of such requests are that of customers withdrawing either Bitcoins or Ethereum mainly.
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The reason behind Piles of Withdrawal Requests
The business of Binance was normal and even the firm was able to render seamless crypto services until 26th March 2023.
Binance’s worse time started right from the beginning of this Monday i.e. 27th March 2023.
On Monday, Binance came to know that it has been made a party to a lawsuit filed by Commodity Futures Trading Commission (CFTC).
It has been claimed by CFTC that Binance as well as its founder/CEO, Changpeng Zhao, have failed in following the relevant law.
For striking out the allegations against Binance and its CEO, CFTC has demanded monetary penalties, compensation, imposition of fines, etc.
Furthermore, CFTC has prayed that Binance should be directed not to offer any crypto products in the US market which are commodities.
CFTC noted that if Binance wants to attract US investors in commodities trading, then it must complete the mandatory registration process.
Without the registration, CFTC would be left with no option but to take harsh action against the violator, clarified CFTC.
Binance Faces A Serious Threat
CFTC’s suit has been filed a couple of days ago. The same shall be heard by a competent forum which, in the instant matter, is the District Court of Illinois.
After trial proceedings, the matter can go up to the High Court and then to the highest Court i.e. Supreme Court.
So the general assumption would be that the case does not pose any immediate threat of any kind.
However, the situation in the instant case is quite alarming and frightening for Binance.
Keeping aside the allegations, the issue itself is between a service provider and the regulator of the service provider. Technically, it is a serious issue as it has the potential of closure of business once and for all as well.
On the other hand, Binance is long maintaining the stance that it does not offer its services in the US or to US citizens.
However, in the plaint, CFTC has raised a claim that Binance is rendering services in the US and to US customers. This is a serious allegation that can only be decided through trial by examining relevant evidence.
Binance’s Custody Lets Go off Over 3500 Bitcoins in A day
The same day, when CFTC named Binance in the suit, withdrawal requests started to pile up. In less than 24 hours, Binance had to say goodbye to 3,655 Bitcoins which were taken out of its treasury by customers.
This was then followed by an exorbitantly high-valued withdrawal request comprising stablecoins worth over $1.5 Billion.
This was quite upsetting because this request came in less than 12 hours time after CFTC’s suit.
On the same day, Binance also saw assets worth more than $850 Million and $240 Million taken out of the firm by the customers. This happened one hour later when $1.5 Billion stablecoins had been withdrawn from the firm.
As of now, there is no easing up in the withdrawal requests which are only doubling every single hour. The investors are not confident about the situation of the Binance exchange.
The entire crypto community is already very much depressed and low on confidence due to the downtrend caused by the FTX crash.
They are not ready to face another major plunge in the crypto industry caused by a major exchange such as Binance. It is going to take time until the investors regain their confidence and start coming back to the exchange.