VIDEO: What is happening with Binance? On-chain analysis with Sandra Leow of Nansen

1 year ago 96

Binance has seen an enormous flood of withdrawals this week, as fear has spread about the health of the exchange in the aftermath of the FTX collapse.

This stems from concern about its proof-of-reserves not revealing enough information, as well as the charges surrounding money laundering that are reportedly coming for CEO Changpeng Zhao (CZ).

I sat down with Sandra Leow, research manager at blockchain analytics firm Nansen, to discuss the movements that are being seen on-chain – with $7 billion withdrawn in the last three days – and how they differ to what was seen in the aftermath of the FTX crash last month.

Sandra chats through the $7 billion of withdrawals that have flowed out of Binance over the last three days, and the destination for these funds on-chain. We also chat about the deposits into the platform, as well as the movements at Coinbase and other exchanges.

Of course, the proof of reserves is a massive talking point. The concern around how useful these are, and the fact that liabilities are not being presented, is a big reason why there is so much anxiety in the market right now. We discuss which entities Nansen tracks and the overall usefulness of the on-chain analytics and the proof-of-reserves implemented by these exchanges.

Zhao has merely said to “ask around” to get proof that Binance do not loan out to anybody, but this has not exactly quelled those who want assurance (as I wrote about in my deep dive on the health of Binance yesterday).

yes, but liabilities are harder. We don't owe any loans to anyone. You can ask around.

— CZ 🔶 Binance (@cz_binance) December 7, 2022

Binance also halted withdrawals of USDC for eight hours, as the massive outflow took place outside of banking hours, with swaps required to be routed through a trad-fi bank in New York. They are now back up and running, but Sandra and I chat through the effects of this.

We also discuss DeFi, which has changed immeasurably this year. Sandra explains how yields have collapsed in DeFi, despite interest rates in the money markets going the opposite way. As we recorded this, the Federal Reserve was meeting to announce the latest rate hike, expected to be 50 bps, raising the rate to 4.5%.

We also chat fund flow in the aftermath of the FTX collapse last month, as well as various other topics. For anyone interested in the chaotic developments on-chain and the movements of the centralised exchanges, as well as the latest Binance concern, this episode will be worth a listen.

Continue the conversation on Twitter with @InvezzPortal, @DanniiAshmore and @sandraaleow / @nansen_ai. Or visit https://www.nansen.ai/ for more information.

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