WSJ: Crypto-industry participants have started to prepare for the collapse of Binance

WSJ: Crypto-industry participants have started to prepare for the collapse of Binance crypto-exchange

If the leading crypto exchange collapses in the short term, liquidity in the market may evaporate, and this will lead to a sharp decline in cryptocurrency prices, experts say

Participants in the crypto industry have begun to prepare for the collapse of Binance, writes The Wall Street Journal (WSJ). One of the institutional traders told reporters that the company has conducted training on the rapid withdrawal of its assets from the leading crypto exchange in case of its failure.

The world's largest cryptocurrency platform is melting away under pressure from U.S. agencies, the publication notes. The US Department of Justice has been investigating the company for several years, which could lead to criminal charges against Binance and its head Changpeng Zhao, as well as billions of dollars in fines. The U.S. Securities and Exchange Commission (SEC) has sued the exchange, alleging that the company and Zhao operated illegally in the U.S. and misused customer funds.

In the US, the activity of local exchange Binance.US has all but died down, while in Europe, more and more countries are banning the exchange from operating in their territories.

Binance has laid off 1.5 thousand employees over the year, and more than a dozen top managers have left it in the last three months. Since the beginning of the year, Binance's share of the cryptocurrency buying and selling market has fallen from 70% to 50%, journalists report, citing data from analytical platform Kaiko.

Industry participants believe that if Binance collapses, other exchanges will take its place, but in the short term, liquidity in the market could shrink, leading to a sharp decline in cryptocurrency prices, the report said.

"You just can't estimate what will happen to the industry if Binance disappears, because it has contributed to a tremendous amount of innovation and growth (in the industry)," said Anthony Georgiades, general partner at investment fund Innovating Capital.

According to the WSJ, the U.S. Justice Department has also been investigating Binance for possible violation of U.S. sanctions against Russia. The pressure from the DOJ partly influenced Zhao's decision to start winding down Binance's Russian business, journalists believe.

Against the backdrop of this investigation, Binance has consistently restricted opportunities for Russian users over the past few months, the article said. In late August, Binance banned customers from Russia from transacting with any currency other than the ruble on the p2p platform, and disabled users who had been verified as citizens of other countries from transacting with rubles.

Changpeng Zhao, for his part, wrote that he was "even too lazy to comment" on this September 26 WSJ article, as he was busy with more important matters. He also recalled that the publication had previously referred to FTX founder Sam Bankman-Fried, who has been charged with fraud and is now in jail awaiting trial, as a "savior." The article about Bankman-Fried is still on the WSJ website.

On September 27, Zhao Exchange announced its complete withdrawal from Russia. Binance said its Russian business would be sold to the CommEX platform, which officially opened the day before.