CryptoQuant, a leading on-chain data and analytics provider, has conducted an assessment of Binance’s net outflows and reserves of BTC, ETH, and stablecoins in three stress-test periods.
The stress-test periods were December 2022, February 2023, and March 2023, which saw increasing regulatory scrutiny, Paxos’ BUSD announcement, and the CFTC lawsuit, respectively.
Despite these challenges, Binance’s BTC and ETH reserves have remained at healthy levels, with users withdrawing lower amounts of coins from the exchange with each regulatory-related announcement or negative industry news.
However, the reserves for stablecoins have decreased significantly, from $24.5 billion in December 2022 to $10.7 billion today, mainly due to a decrease in BUSD reserves, which accelerated after Paxos’ announcement.
Whereas the report shows an increase in BTC reserves from 509,000 in December 2022 to 581,000 currently and ETH reserves have risen to 4.487 million from a low of 4.420 million during the same period.
Binance’s Health After CFTC Lawsuit
On-chain data shows that Binance’s net flows have remained within historical ranges when compared to total reserves (net flow-reserve ratio). The CFTC lawsuit alleges that the exchange and its founder Changpeng Zhao (CZ), violated trading and registration rules and engaged in a scheme to evade U.S. regulatory requirements.
According to Binance’s CEO, the complaint appears to contain an incomplete recitation of facts. They do not agree with the characterization of many of the issues alleged in the complaint.
According to the report, the exchange has experienced lower net bitcoin outflows during periods of regulatory scrutiny. In December 2022, when there was a lot of regulatory uncertainty in the market, Binance saw significant net bitcoin outflows of 40,353 BTC in just one day and a total of 78,744 BTC between December 10th and 16th.
However, during the announcement of Paxos’ BUSD in February 2023, the largest daily net outflow was only 5,027 BTC on February 12th.
Despite the recent announcement of the CFTC lawsuit against Binance, the exchange has only experienced a daily net outflow of 4,505 BTC, which is significantly lower than the December 2022 levels. It indicates that investors have not panicked and withdrawn their funds en masse from the exchange.
The case of Ethereum net outflows is similar, with the highest daily net outflow being 278k ETH in December 2022 and a daily net outflow of 76,146 ETH after the CFTC lawsuit was announced.
However, Binance’s net flows have remained within historical ranges, and flow from other exchanges into Binance still suggests that investors/traders view the exchange as desirable.