Binance, the world’s largest cryptocurrency exchange, paused withdrawals of the stablecoin USDC on Tuesday while it carried out a “token swap.”
USDC withdrawals were resumed about 8 hours after Binance first announced the pausing of withdrawals.
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The move got here as investor concerns grow about Binance’s stability following the collapse of rival exchange FTX in addition to a report of a possible criminal investigation from the U.S. government.
Binance said earlier on Tuesday it had “temporarily paused” USDC withdrawals while it does a “token swap.” This involves swapping one cryptocurrency for one more without the necessity for fiat currency.
Changpeng Zhao, CEO of Binance, tweeted that the exchange is seeing a rise in withdrawals of USDC, a cryptocurrency generally known as a stablecoin since it is pegged one-to-one with the U.S. dollar.
USDC is utilized by investors to trade out and in of various cryptocurrencies without the necessity to move a reimbursement into U.S. dollars. If traders are withdrawing USDC from Binance, it may very well be to maneuver it onto one other platform.
Zhao said that any transfers into USDC from the stablecoin generally known as PAX, in addition to Binance’s own token BUSD, require routing through a bank based in Latest York which will not be yet open. The suggestion from Zhao is that users wish to convert their PAX and BUSD into USDC with a purpose to withdraw their funds from Binance.
A token swap may very well be a way for Binance to get more USDC quickly while the banks are closed with a purpose to resume withdrawals for patrons.
Zhao said users could still withdraw other stablecoins including BUSD and tether. Deposits are usually not affected, he said.
Binance’s own token called BNB was trading down about 5% on Tuesday morning, in response to data from CoinGecko.
It is not normally excellent news when a crypto firm has to pause withdrawals. In the summertime, crypto firms including lender Celsius needed to pause withdrawals before ultimately filing for bankruptcy. There isn’t a indication of any such trouble for Binance.
Up to now 24 hours, Binance has seen $1.6 billion of outflows from its platform, in response to a tweet from crypto data company Nansen published early Tuesday. Binance has greater than $60 billion of assets on its platform, Nansen said.
Investors jittery
The collapse of FTX and arrest of its former CEO Sam Bankman-Fried has crypto investors on edge with fears of further contagion across the industry.
Binance has been within the highlight since its decision to sell its stake in FTX’s self-issued FTT digital tokens, which preceded the failure of the rival exchange.
Investors have called for more transparency from Binance’s business. Last month, the corporate issued a proof of reserve through which it claims to have a reserve ratio of 101%. Which means it has enough assets to cover customer deposits.
But critics have said that the proof of reserves haven’t gone far enough to provide assurances of Binance’s collateral. Mazars, the auditing firm Binance used for its proof of reserves, said in its five-page report that the corporate does “not express an opinion or an assurance conclusion.”
Investors are also keeping tabs on a report from Reuters that U.S. Department of Justice prosecutors are delaying the conclusion of a criminal investigation into Binance. Reuters, citing 4 people aware of the matter, reported that the investigation is targeted on Binance’s compliance with anti-money laundering laws. Binance responded saying: “Reuters has it unsuitable again.”
“We haven’t any insight into the inner workings of the US Justice Department, nor would it not be appropriate for us to comment if we did,” the corporate said in a tweet on Monday.
