Binance CEO Reacts To Massive Exchange Flow Data

Over the past few days, several platforms have reported massive exchange outflows from Binance following the SEC lawsuit. Also, data suggests that asset outflow from centralized exchanges has accelerated over the same period.

However, while these data suggest investors are moving funds due to the ongoing regulatory enforcement, Binance CEO Changpeng Zhao argues otherwise. The CEO said these platforms might have misinterpreted the data since things aren’t always as they seem.

Exchange Outflow Data May Be Misconstrued—CZ 

Most recently, prominent blockchain analytic firms like Nansen and DefiLlama reported increased exchange outflows from Binance amid heated lawsuits. Nansen data showed a net asset outflow of $2.36 billion over the past seven days from Binance and $123.7 million from BinanceUS.

Another blockchain analytics platform, DefiLlama, reported a higher figure than Nansen’s. According to DefiLlama, Binance has witnessed $3.35 billion in outflow. 

On the other hand, Glassnode data shows the crypto exchange’s bitcoin balance has reduced by 5.7%, which is about $1 billion in the last seven days.In light of these, Binance CEO CZ tweeted on June 10, disputing that some exchange outflow data may be misleading. 

He explained that some third-party analytics measure change in Assets Under Management (AUM) as outflow. According to the CEO, this representation often includes crypto price declines, which decrease AUM. 

Therefore CZ claimed that Binance’s outflow was $392 million, a drop in the bucket compared to the $7 billion in 24-hour assets outflow recorded in November 2022 during the FTX fiasco. The CEO also attributed the large outflows to fluctuating price movements, noting that large netflows are normal when volatility is high.

In CZ’s words, “Some even only measure outflows, net inflows. On sharp price movement days like today, many arbitrage traders move a lot of funds between exchanges, usually exponentially more than on normal days.” 

Notably, the SEC lawsuit on two of the largest crypto exchanges severely impacted the crypto market. The total market capitalization declined by 7%, more than $80 billion. In addition, several crypto prices nosedived due to bearish market sentiment. 

DEXs Dominate CEXs in Trading Volume

However, the increased outflows on centralized (CEX) platforms appeared beneficial for decentralized exchanges (DEX). The data reveals the trading volume across top decentralized exchanges skyrocketed by 444% while the total value locked (TVL) on DeFi protocols declined below $500 billion.

Trading volume on top decentralized exchanges, like Uniswap V3 (Ethereum), Uniswap V3 (Arbitrum), and PancakeSwap V3 (BSC), increased by over $792 million between June 5 and 7. At press time, CoinMarketCap data shows that most DEX trading volumes are still increasing. 

Trading volume on PancakeSwap v3 (BSC) increased by 89.89%, while others saw considerable increases except for Uniswap v3 (Ethereum) and Uniswap v3 (Polygon), with 7.34% and 12.82% decline, respectively.

But despite the massive outflows, Binance remains the largest crypto exchange by trading volume, according to CoinMarketCap data.