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Panic At Binance Following CZ’s Departure? Analyzing 24-Hour Inflow and Outflow Trends

A new era for the crypto industry approaches as the world’s largest exchange, Binance, changes leadership. Yesterday, the company’s founder and CEO, Changpeng “CZ” Zhao, stepped down as part of an agreement with the US government.

The deal might have sparked a new era of adoption and legitimacy for the nascent industry at the cost of CZ’s position and a $4 billion fine. Fresh data looked into Binance’s transactions to check if users believe in the company’s future following the historic decision.

Binance BNB BNBUSDT

Binance Safe From FTX Like Bank Run?

According to crypto analysis firm Nansen data, Binance recorded almost $1 billion in negative netflow following yesterday’s news. The data indicates that the platform’s USDT value decreased by $246 million, followed by Bitcoin’s value, which declined by $76 million.

Users who feel uncertain about the platform’s future withdraw their money, potentially triggering a bank run. However, Nansen’s data shows that this scenario is far from materializing in this trading venue.

While the negative netflows stand at $955 million, there is no “mass exodus” or panic from users trading on Binance. Nansen claims the platform’s holding value increased from $64.6 billion to $65.2 billion.

Binance CZ BNB BNBUSDT Chart 2

The analytics firm previously stated that Binance handled bigger net flows. First, when the US Securities and Exchange Commission (SEC) filed a lawsuit against the company, and later, when FTX went bankrupt following a massive bank run.

As mentioned, Binance seems unlikely to follow a similar fate. Nansen stated:

In the past, Binance has processed higher volumes of outflow and negative netflow: Jun 2023 after the SEC sued Binance, December 2022 after insolvency rumors, and the immediate aftermath of FTX. We will provide another update 24 hours after the news originally broke.

CZ’s Departure Forecast Good Times For Crypto

Across the crypto community, the debate around CZ’s departure has been fierce. However, the consensus is optimistic.

A report from The Block cites major banking institution JPMorgan claiming that the Binance deal removes a “systemic risk” for the industry. In 2022, when FTX collapsed, the price of Bitcoin crashed to a low of $15,000 and took months to recover.

With 150 million users on its platform and millions of capital injected into multiple ecosystems. Binance’s collapse would have been equally, if not more, catastrophic than FTX for the nascent industry.

JPMorgan analyst Nikolaos Panigirtziglou told The Block:

We see the prospect of settlement as positive as uncertainty around Binance itself would subside and its trading and Smart Chain business would benefit. For crypto investors the prospect of settlement would see the elimination of a potential systemic risk emanating from a hypothetical Binance collapse.

Cover image from Unsplash, chart from Tradingview

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Spot Bitcoin ETF Odds ‘Might Have Increased To 100%’: Matrixport

Matrixport, a leading digital finance platform, today, November 22, released a comprehensive research note focusing on the significant implications of yesterday’s developments in the crypto industry, particularly regarding the prospects of a spot Bitcoin Exchange-Traded Fund (ETF) in the United States.

Following the guilty plea of Binance CEO Changpeng Zhao (CZ) and the substantial financial settlements involved, Matrixport suggests that the path for approving a spot Bitcoin ETF might have become significantly clearer. The note highlights the regulatory crackdowns and compliance upgrades in the crypto sector, indicating a shift towards greater regulatory alignment with traditional financial (TradFi) systems.

“Some would argue that the US agencies have cleaned up the industry this year by dismantling the US crypto-related banks, as two of them were running an internal ledger that crypto companies could use 24/7 to transfer fiat. Arguably, few (perceived) major actors are left, and with Bitcoin only declining -3.4% during the last 24 hours, the market is stomaching a major risk-off event,” Matrixport remarks.

Spot Bitcoin ETF Approval Odds At 100% Now?

The company points out that with stringent enforcement actions and enhanced compliance programs becoming the norm among crypto exchanges, the differentiation between regulated and non-regulated cryptocurrency exchanges may become a key metric in 2024. This shift is seen as instrumental in the potential approval of a spot Bitcoin ETF in the US, a development long anticipated by the industry.

“The result will likely be that more exchanges will enhance their compliance programs and become part of a surveillance-sharing agreement, which will be instrumental in approving a spot Bitcoin ETF in the US,” the firm stated, adding, “With this plea deal, the expectations for a spot Bitcoin ETF might have increased to 100% as the industry will be forced to follow the rules that TradFi firms must follow.”

The firm believes that this “whitewashing” of the industry will not only enhance Bitcoin’s adoption by institutional players but also position it as a safe-haven asset in investment portfolios. “More importantly, this industry’s whitewashing will strengthen the Bitcoin adoption case for institutional players and will likely become a safe-haven asset in investors’ portfolios,” Matrixport predicts.

The note also touches on the anticipated sale of the FTX exchange and its potential relaunch under a US securities law-compliant management team by Q3 2024. Matrixport speculates that this could lead to significant inflows, estimated between $24-50 billion, into any US-listed Bitcoin ETF. They also note the increasing trend of crypto firms making markets on CME-listed crypto derivatives, indicating a shift from retail-focused, unregulated exchanges to those that are fully regulated and cater to institutional clients.

‘Dark Cloud Has Been Removed’ As ETF Makes Progress

Analysts and industry experts have echoed Matrixport’s sentiments. Will Clemente, a noted analyst, stated, “With resolution on Binance, just a matter of weeks until Bitcoin ETF approval now.” Tony “The Bull” Severino, head of research at NewsBTC, commented, “A dark cloud has just been removed from the crypto market.” Conversely, Scott Johnsson, a finance lawyer at Davis Polk, offered a more cautious view, suggesting that “It’s far more likely an ETF decision led the Binance resolution than the other way around imo. And I’m not convinced either is that likely.”

Remarkably, there has been some movement in the spot ETF approval process in the last few days. Ark Invest has kicked off the third round of amendments to the S-1 filings, Grayscale had a meeting with the US Securities and Exchange Commission yesterday regarding its “uplisting.”

At press time, BTC traded at $36,483.

Bitcoin price

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Binance’s Busy Day, Kraken’s Second SEC Fight

Binance is paying one of the largest fines in corporate history to the U.S. Department of Justice, while its founder and CEO, Changpeng “CZ” Zhao, stepped down from his role running the platform as part of a settlement with multiple federal agencies. Meanwhile, Kraken is facing a lawsuit from the U.S. Securities and Exchange Commission that echoes the SEC’s previous wave of suits.

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Celsius Network’s Shift Towards Bitcoin Mining Plan

Bankrupt crypto lender Celsius Network has revealed that the company planning on switching to a Bitcoin mining-only company, following its bankruptcy court’s confirmation of the plan.

Celsius Transition To Mining NewCo

Celsius Network‘s transition into a mining company coincides with its bankruptcy proceedings. Over the past year, the digital assets company has experienced financial challenges, which led to its bankruptcy filing.

In September, Celsius filed for a reimbursement plan as its bankruptcy plan to resolve the financial challenges in the company. This saw over 95% of Celsius’ creditors voting in favor of this reimbursement plan.

According to the recent court filing, the cryptocurrency company intends to convert its services into Bitcoin mining operations exclusively and the new company will be known as Mining NewCo.

In addition, the company seems to have forsaken its initial plan for the company’s future with Fahrenheit Group. The firm asserted that the transition was the primary business of the new company to be formed with Fahrenheit, LLC. 

This was the core business of the new company that was proposed to be created with Fahrenheit, LLC that was described in the Plan (the “Fahrenheit NewCo”).

The new company which was supposed to be known as Fahrenheit NewCo was formed after it purchased Celsius this year after it purchased Celsius in a bidding war.

Celsius and the Fahrenheit Group initially came to a deal that the group would provide the firm with funds and operational expertise. Fahrenheit successfully acquired the firm’s assets this year. 

In the meantime, the firm is in touch with certain parties in order to organize the management of the Bitcoin mining company.

Celsius

The SEC’s Imparted The Transition Move

The firm’s plan to switch to a Bitcoin mining company was triggered by the United States Securities and Exchange Commission’s (SEC) feedback after the court confirmed its plan. The company also highlighted that the new mining company will be owned by its customers.

The filing stated:

Celsius received feedback from the Securities and Exchange Commission (the “SEC”) on certain aspects of the Plan, which has resulted in Celsius now intending to begin the process to apply to register the shares in a new publicly traded Bitcoin mining company that will be owned by Celsius customers (the “Mining NewCo”).

Additionally, the feedback seems to have also imparted the initial plan of transferring the firm’s assets to the Fahrenheit Group. As noted in the filing, Celsius estates will retain certain of the assets in order to be monetized by the plan administrator. 

However, based on the SEC’s feedback, the Debtors, in consultation with the Official Committee of Unsecured Creditors (the “Committee”), have determined that certain of the assets that were to be transferred to the Fahrenheit NewCo must, for regulatory reasons, be retained by Celsius’s estates to be administered and monetized by the Plan Administrator and/or Litigation Administrator for the benefit of creditors.