After Binance and its former CEO, Changpeng Zhao, admitted guilt to federal charges in the United States, Binance’s Bitcoin reserves depleted by $200 million.
Even though CZ has posted bail, prosecutors are pushing for him to remain in the US until sentencing.
Based on on-chain data from CryptoQuant, Bitcoin is moving from Binance to Coinbase since yesterday. The research firm noted that, compared to Binance, Coinbase’s reserves have decreased by 5,000 BTC, while Coinbase’s have increased by around 12,000 BTC.
Due to legal concerns, analysts believe that individual investors are withdrawing their funds from Binance, leading to this movement.
A CryptoQuant analyst revealed that retail investors are shifting their funds away from Binance to compliant or licensed exchanges, causing Binance’s Bitcoin reserves to diminish.
“The decrease in Bitcoin reserves on Binance appears to be a result of retail outflows,” Bradley Park wrote in a note.
Greta Yuan, head of research at the Hong Kong-based digital-asset platform VDX, expressed in a note that ongoing apprehension persists in the market due to recent legal challenges faced by the company.
In the near future, she expects a trend of users moving their funds towards compliant or licensed exchanges for reassurance.
According to the US Securities and Exchange Commission (SEC) and many cryptocurrency commentators, Binance has previously used its bitcoin reserves to support the value of its own token, BNB. Both CZ and Binance strongly deny the allegations.
Blockchain company Nansen claims that the exchange saw withdrawals of over $1 billion in a single day after Zhao resigned and admitted guilt in a plea agreement with the US Justice Department. Also, as market makers reduced their positions, market liquidity dropped by 25%.
An unprecedented $4.3 billion settlement between Binance and the DOJ includes a $1.8 billion fine against the cryptocurrency exchange in addition to a $2.5 billion forfeiture. The agreements asked the exchange to withdraw from US markets, financial remittances, and adhere to strict compliance guidelines.
The value of BNB significantly dropped by 14% after the announcement of the settlement and CZ’s resignation, falling from $264 to $227. Presently, the value stands at $233, demonstrating a 20% decline compared to the same period last year.
Meanwhile, instead of allowing Zhao to return to his residence in Dubai until his sentencing in February, US prosecutors are seeking his detention within the country. Due to his involvement in failing to implement appropriate anti-money laundering measures, the former Binance top executive could face up to 18 months in prison.
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