The news: Following the arrest of former FTX founder Sam Bankman-Fried (SBF), Binance, the largest crypto exchange in the world, experienced an influx of withdrawal requests from nervous investors.

Normal market behavior: At one point during this week, the exchange handled over $3 billion in withdrawals over a 24-hour period. But it wasn’t enough to spook Binance CEO Changpeng Zhao (CZ).

• CZ said the exchange has experienced worse days, and that money was already flowing back into the exchange. He said that this activity is just normal market behavior.
• He also suggested stress testing withdrawals on each centralized exchange on a rotating basis to make sure they can handle such requests.
• Binance temporarily halted withdrawals of US stablecoin USDC on the exchange while it conducted a token swap with its own coin, BUSD. The pause occurred because the New York-based bank that does the swap was closed, as it was outside of US banking hours.
• One of the main catalysts behind the requests came from market maker Jump, which withdrew large sums of money after weeks of no deposit activity. This piqued investors’ attention and led to a small run on the exchange.

Taking cues from FTX: All eyes in the crypto world are on SBF and FTX due to the Securities and Exchange Commission (SEC) charging the disgraced founder with defrauding investors. Binance will likely be a keen observer, as it knows this will intensify scrutiny of the crypto behemoth.

• Earlier this week, Reuters reported an update on an investigation begun in 2018 regarding money laundering conspiracy and criminal sanctions violations. Some involved in the investigation believe there’s enough evidence to file criminal charges against some executives, including CZ.
• Another report, covered by The Wall Street Journal, called into question Binance’s proof of reserves and other internal controls. Critics say the report didn’t provide adequate information on how the exchange liquidates assets, and that its reserves were only 97% collateralized.

At the very minimum, Binance should be taking note of FTX’s shortcomings and work to shore up its own governance controls, if necessary. It’s still unclear if the FTX collapse will expedite any charges against Binance executives, but the firm should prepare for questions and reviews from regulators.

The ultimate reckoning: The withdrawals at Binance are causing the crypto community to speculate on what would happen if the crypto giant were also to fold.

• Some said that a Binance collapse would bring the crypto sector “back to the stone age.” Others said that crypto would disappear altogether.
• But some believe that if Binance became insolvent, crypto would still remain.
• Some in the community are questioning why anyone is rooting for the firm’s downfall. They’re accusing the media of trying to cause a run on the exchange to bring about its demise.

The big takeaway: As of now, a Binance collapse isn’t impending. But the FTX scandal is providing a valuable opportunity for the exchange, and any other crypto firms, to learn about the controls and risk-mitigation tools they should have in place to appease regulators and keep investors safe. It’s also giving a lesson on how cooking the books, or not keeping a book at all, doesn’t make for good reading.

This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

• Are you a client? Click here to subscribe.
• Want to learn more about how you can benefit from our expert analysis? Click here.