Binance chief executive Zhao Changpeng said “things seem to have stabilised” after customers pulled billions of dollars of funds from the exchange, in an attempt to allay persistent investor fears about the state of the cryptocurrency industry following the collapse of FTX. Deposits are returning, wrote Zhao, known in the industry as “CZ”, in a Twitter post on Wednesday. On Tuesday, 24-hour net outflows on Binance, the world’s largest cryptocurrency exchange, reached US$3 billion, according to blockchain research firm Nansen. On the same day, Binance suspended withdrawals of the stablecoin USDC, citing banking complexities. The move had prompted concerns among cryptocurrency investors about the health of Binance, before the exchange announced on Wednesday that withdrawals had resumed. Terra project was ‘mismanaged’ on hindsight, Binance founder says Binance said that US$1.14 billion in withdrawals in a 12-hour window was “handled with ease” because its business model is simply to “hold assets in custody and generate revenue from transaction fees”. Since the November 11 bankruptcy of FTX, once seen as the biggest rival to Binance, the Cayman Islands-incorporated exchange has been seeking to prove it has all of its customers’ reserves. This would differentiate it from FTX, which got into trouble by lending customer funds to its sibling trading firm Alameda Research. One move to reassure users was the publication this month of a “proof of reserves” report on its bitcoin (BTC) holdings conducted by third-party accounting firm Mazars, which showed that Binance had enough funds to cover all customer deposits on the day of its investigation. But the report drew scepticism because it was not a full financial audit and does not prove Binance’s financial health. “Releasing the BTC custody reserves was just the first of many steps in the weeks ahead to provide more transparency and reassurance of our custody reserves,” Binance said in a statement. “In the wake of recent events, it’s imperative we develop new systems that allow users to access continuous on-chain verification of their assets in custody to regain user trust and once again prove that crypto is more secure and transparent than traditional finance.” Shock from the meltdown of FTX, once the world’s second-largest cryptocurrency exchange, is still reverberating through the troubled industry worldwide, as investors brace for further fallout amid more regulatory action. Earlier this week, FTX founder Sam Bankman-Fried was arrested in the Bahamas as the US Securities and Exchange Commission (SEC) charged the 30-year-old founder with defrauding investors and “orchestrating a massive, years-long fraud” that diverted billions of dollars of customer funds “for his own personal benefit”. In Hong Kong, the birthplace of FTX and, according to the SEC, one of the exchange’s principal places of business, regulators also ramped up their efforts to warn the public of the risks involved in cryptocurrency trading following FTX’s meltdown. This came just weeks after the city announced a high-profile regulatory overhaul in a push to become a virtual asset hub at the end of October. Investors should be aware of the risks associated with virtual asset (VA) platforms that offer high interest rates on VA deposits, Hong Kong’s Securities and Futures Commission (SFC) said in a statement on Tuesday, warning that some of these services amount to securities products that should be regulated. However, most virtual assets do not qualify as securities under Hong Kong regulations. “Investors may suffer significant or even total loss, especially in the event of fraud or collapse of a VA platform as evident in the recent fallout of a number of VA platforms,” the SFC said. Last week, the city’s Legislative Council passed the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which introduces a licensing regime for VA platforms that will come into effect in June next year. Binance CEO Zhao says crypto regulation is better than fighting it Concerns for Binance also came as Reuters reported that some US Department of Justice prosecutors are considering “moving aggressively” against the exchange and filing criminal charges against executives, including CZ, with an investigation reportedly focusing on Binance’s anti-money-laundering practices. In response, Binance said on Twitter on Monday that “Reuters has it wrong again”, and argued that the company has a strong financial crimes investigation team. “Regulators are doing a sweeping review of every crypto company against many of the same issues,” Binance said in a statement. “This nascent industry has grown quickly and Binance has shown its commitment to security and compliance through large investments in our team as well as the tools and technology we use to detect and deter illicit activity.”