• Binance Net outflows hit $902 million in the past 24 hours surpassing all other crypto-centralized exchanges.
• Corporate structure, Bitcoin liabilities, and internal control quality are among the points of concern that are unavailable in the Binance audit.

Binance Net outflows hit $902 million in the past 24 hours surpassing all other crypto centralized exchanges according to data by blockchain intelligence platform Nansen. Binance gross outflows have been approximately $8.8 billion, while gross inflows have been around $5.1 billion.

The drop in liquidity might be a result of huge market players leaving the US-based exchange. The 45-year-old Binance CEO Changpeng Zhao believes that this is just a situation of Fear Uncertainty and Doubt (FUD).

You can FUD about someone without explicitly mentioning their name, which spreads awareness. It also helps unite their supporters because it forms a common defense alliance.

Jump Trading and Wintermute are just a few of the crypto market makers that have moved funds from Binance in the last seven days. The largest entity withdrawing from Binance is Jump Trading, the withdrawals include $102 million in Binance USD (BUSD), the exchange’s stablecoin issued by Paxos; $14 million of Tether’s USDT; and $10 million of ether (ETH).

The exchange has become a target for a United States money laundering lawsuit. According to a report by the U.S. department of justice, Binance the largest cryptocurrency exchange by volume is to be charged with financial crimes.

Reuters has it wrong again.

Now they're attacking our incredible law enforcement team. A team that we're incredibly proud of – they've made crypto more secure for all of us.

Here’s the full statement we sent the reporter and a blog about our remarkable law enforcement team.

— Binance (@binance) December 12, 2022

Here is why the Binance Proof of Reserves is raising red flags

Following the FTX collapse early last month, Binance made efforts to promote transparency and released a proof of reserves system that allows users to verify their assets using a Merkle tree but the system failed to include accounts with negative balances. Mazars disclosed its audit report on Binance’s Bitcoin reserves on Dec. 7.

A Merkle tree is a cryptographic tool that enables the consolidation of huge amounts of information in a single hash called the Merkle root.

Related: KRAKEN CEO CALLS BINANCE’S PROOF OF RESERVES “POINTLESS”-HERE’S WHY

The swift collapse of rival exchange FTX, piled on other industry debacles, has prompted other exchanges to prove that they are safeguarding customers’ assets.

Logically, a complete proof-of-reserve audit must include the sum of client liabilities, user-verifiable cryptographic proof that each account was included in the sum, and signatures proving the custodian’s control over the wallets.

Binance’s “proof of reserve” report doesn’t address effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers. I worked at SEC Enforcement for 18+ yrs. This is how I define “red flag. https://t.co/6oEqmArjS9

— John Reed Stark (@JohnReedStark) December 11, 2022

This did not increase the confidence of investors in Binance but instead raised eyebrows in the crypto space as it lacked information related to internal controls and how assets are liquidated. Binance has been going through a corporate reorganization for almost two years, and in spite of that, the audit lacked Binance’s current corporate structure.