The largest crypto exchange, Binance, temporarily halted USDC stablecoin withdrawals due to a “token swap.” Other stablecoins are not affected.
The paused USDC withdrawal happened amidst FUD in recent days, both in media outlets and on Twitter. In short, halted withdrawals of USDC add to already growing investor concerns about the stability of Binance following the collapse of FTX, as well as reports of a potential criminal investigation by the U.S. government.
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Changeng Zhao, CEO of Binance, commented on USDC halts:
On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open.
These are 1:1 conversions, no margin or leverage involved. We will also try to establish more fluid swap channels in the future. In the meantime, feel free to withdraw any other stable coin, BUSD, USDT, etc.
Earlier in September, Binance announced that it would automatically convert user balances and new deposits of USD Coin and other Pax Dollar and True USD stablecoins into its own Binance USD stablecoin. At that time, the company stated:
This will not affect users’ choice of withdrawal: users will continue to be able to withdraw funds in USDC, USDP and TUSD at a 1:1 ratio to their BUSD denominated account balance.
After the FTX collapse, trading activity on Binance spiked by 30%. In the past 24 hours, Binance’s net outflows, the difference between the value of assets sent and withdrawn from the exchange, hit $902 million, according to data from intelligence platform Nansen.
Binance’s net outflow has surpassed those of all other centralized exchanges’ in the last 24 hours, and is almost nine times larger than the second largest outflow.
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