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A $4 billion debt can push many companies around the world into bankruptcy. However, when it comes to Binance, the situation doesn’t seem likely to unfold that way. The resignation and penalty news shook the markets visibly today, but this situation may not be as gloomy as it appears.
On November 21st, the resignation news of Binance CEO Changpeng “CZ” Zhao hit the cryptocurrency world like a bombshell.
Binance Receives a Major Penalty
It has been announced that Binance and CZ have reached an agreement with the US Department of Justice regarding a $4.3 billion penalty. According to information provided by Reuters, the agreement includes $3.4 billion from the US Treasury’s Financial Crimes Enforcement Network and $968 million from the Office of Foreign Assets Control.
However, compared to Binance’s reserves, this penalty is considered a small amount. On November 22nd, Conor Grogan, Director of Product Strategy and Business Operations at Coinbase, conducted a research on Binance’s institutional crypto assets based on the Proof of Reserves.
According to the latest Proof of Reserves report provided by the company, the exchange has approximately $6.35 billion in total institutional crypto assets, including $3.19 billion in stablecoins. Moreover, this figure does not include cash balances held outside the chain or funds held in wallets not disclosed in the proof of reserves.
The research conducted by Grogan revealed that Binance could pay off the entire $4.3 billion penalty with zero cryptocurrency sales from the exchange. According to the data provided, the exchange has a massive amount of $76.8 billion in total customer asset balances. According to CoinGecko data, the token value of the exchange was reported to be $67 billion.
Market Reacts Mildly
After the opening of the market in Asia on Wednesday, the cryptocurrency markets seemed to start recovering from the turbulence caused by this important news.
Following the emergence of the news, there was a decrease of approximately 3% in the total market value. The total value, which had been rising for a while, dropped to $1.41 trillion, resulting in an outflow of approximately $50 billion from the market.
In addition, a recovery began in the markets during the Asian trading session on Wednesday morning. The total value then rose to $1.43 trillion and continued to move within the channel in November.
While Bitcoin experienced a 2.6% drop during the day, Ethereum suffered a 1.4% loss in the past 24 hours. With the troubles faced by the exchange, BNB, which took center stage, became the biggest loser and dropped to $235 at the time of writing, a 9% decrease.
