Binance sees $956 million in outflows after Zhao steps down to settle U.S. probe

2023-11-23 00:22

(Reuters) -Investors pulled about $956 million from crypto exchange Binance over the past 24 hours, data firm Nansen reported on

(Reuters) -Investors pulled about $956 million from crypto exchange Binance over the past 24 hours, data firm Nansen reported on Wednesday, a day after its chief, Changpeng Zhao, stepped down and pleaded guilty to breaking U.S. anti-money laundering laws.

The deal, which will see Binance pay $4.3 billion to U.S. authorities to settle the years-long illicit finance probe, has raised questions over the future of the world's largest crypto exchange and marks another blow for an industry beset by scandals. Zhao has been replaced by Richard Teng, a senior Binance executive who joined in 2021, the company said.

The Nansen data does not include bitcoin flows, but nevertheless signals that Tuesday's news rattled some customers of the exchange. Still, there is well over $65 billion of assets on the platform, according to Nansen data.

"Binance has seen significant exchange outflows since the announcement, but relative to their total holdings, it’s quite small," Nansen analysts said.

Investors pulled around $1.43 billion from the crypto exchange and its U.S. affiliate in June after the U.S. Securities and Exchange Commission sued the companies.

Binance did not immediately respond to a Reuters request for comment.

While authorities have probed Zhao and Binance for years, Zhao's exit marks a dramatic development for one of the most powerful figures in the crypto industry. Zhao, who resides in Dubai, entered his plea in a Seattle court on Tuesday.

He agreed to pay a $50 million fine and faces a maximum prison sentence of 18 months under federal guidelines. It was not immediately clear how much jail time the Justice Department is seeking, but under Zhao's plea deal he has agreed not to appeal any sentence up to that length. Officials for the agency did not immediately return calls seeking comment on Wednesday.

Zhao agreed to appear at a Feb. 23 sentencing hearing in Seattle after promising a $175 million bond and another $15 million held in a trust account, according to a court filing. He has agreed to return to the United States 14 days before sentencing.

(Reporting by Lisa Pauline Mattackal in Bengaluru; Jonathan Stempel and Chris Prentice in New York; writing by Michelle Price; Editing by Anil D'Silva and Chizu Nomiyama)