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Rumors of an American probe into Binance are spreading. The stress test for the largest cryptocurrency exchange in terms of trading volume is currently being performed.
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Yesterday's report said that federal authorities are investigating alleged money laundering offenses involving Binance and Changpeng Zhao, its CEO (CZ).
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Nansen, a cryptocurrency data analyst, said that Binance had seen nearly $3 billion in net capital withdrawals over the past seven days.
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CZ reports that the exchange saw more than $1 billion in withdrawals yesterday. He stated that there were some withdrawals (net $1.14billionish) today. This has happened before.
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We have net withdrawals on some days and net deposits on other days. It's business as usual for us.
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After the demise of FTX, cryptocurrency exchanges have come under increased scrutiny for their financial operations. Binance was one of many to release proof-of-reserve reports.
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Others, including Jesse Powell (creator of Kraken), have voiced their dissatisfaction at the veracity of the allegations.
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Powell maintained that he was not trying to sow fear and rumors. However, he did identify possible warning signs in Binance’s most recent report.
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"Big red flag to me is the fact that this seems more like an attempt to prove collateral than proved reserves.
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They even admitted to being insolvent regarding real assets owed and tokens controlled.
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He explained that the 'collateral accounting trick' is exactly how FTX became solvent."
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