December 14, 2022: -On Tuesday, Binance, the largest cryptocurrency exchange of the world, said that it paused withdrawals of the stablecoin USDC while carrying a “token swap.”
The move comes as investor concerns increase regarding Binance’s stability after the collapse of rival exchange FTX and a report of a potential criminal investigation from the U.S. government.
Binance said it has “temporarily paused” USDC withdrawals while doing a “token swap.” This involves changing one cryptocurrency for another without the requirement for fiat currency.
Changpeng Zhao, CEO of Binance, tweeted that the exchange is seeing a surge in withdrawals of USDC, a cryptocurrency called a stablecoin, because it is pegged every one with the U.S. dollar.
Investors use USDC to trade in and out of various cryptocurrencies without moving money back into U.S. dollars. If traders start USDC from Binance, it could be to transfer it onto another platform.
Zhao stated that any transfers into USDC from the stablecoin called PAX and Binance’s token BUSD require routing via a bank based in New York, which has yet to be opened. Zhao suggests that users want to transfer their PAX and BUSD into USDC to take back their funds from Binance.
A token transfer could be a way for Binance to get over USDC quickly while the banks are closed to resume customer withdrawal.
Zhao said users could still withdraw different stablecoins, including BUSD and tether. Deposits are not affected, he stated.
Binance’s token, called BNB, was trading down by 5% on Tuesday morning, the data from CoinGecko stated.
It’s not usually good news when a crypto company has to pause withdrawals. In the summer, crypto firms, which include lender Celsius, had to stay withdrawals before ultimately filing for bankruptcy. There is no indication of any trouble for Binance.
In the past 24 hours, Binance has witnessed $1.6 billion of outflows from its platform, the tweet from crypto data firm Nansen published on Tuesday. Binance has over $60 billion of assets on its platform, Nansen stated.