More than $900 Million Worth of Assets Were Withdrawn from Binance in a Day

More than $900 Million Worth of Assets Were Withdrawn from Binance in a Day

According to the Dune analytical platform, on February 13, the outflow of funds from the Binance crypto exchange amounted to $916 million. This was the largest outflow of funds in one day since November 24 last year, when assets worth $1 billion were withdrawn from Binance.

Withdrawals by exchange users on February 13 follow an order from the New York City Department of Financial Services (NYDFS) to Paxos to stop issuing the Binance USD (BUSD) stablecoin and a report that the US Securities and Exchange Commission (SEC) intends to sue Paxos.

The Binance-branded BUSD token is the third largest stablecoin by capitalization after Tether (USDT) and USD Coin (USDC) with a value of $15.7 billion, according to CoinGecko on February 14. As early as the morning of February 13, the capitalization of the asset reached $16.1 billion, and it decreased by $400 million overnight.

Trading paired with the token takes over 25% of the total trading volume of Binance. The head of the exchange, Changpeng Zhao, immediately admitted that after the ban on the issuance of new tokens, the capitalization of the asset will decrease, and investors will begin to switch to other stablecoins.

The New York regulator explained the ban on the issuance of BUSD by the fact that the issuer of the stablecoin Paxos “violated the obligation” to conduct a periodic risk assessment and user verification.

The issuer of rival stablecoin USDC, Circle, filed a complaint with the NYDFS against Binance last fall, according to Bloomberg. Circle told the regulator that its blockchain data team found that Binance does not hold enough cryptocurrencies in reserve to support the tokens it issued.

At the same time, the SEC, for its part, is preparing to file a lawsuit against Paxos, arguing that BUSD is an unregistered security. On Feb. 13, Paxos said it strongly disagreed with the SEC because BUSD is not a security under federal securities laws, and added that the company was ready to “vigorously litigate” if necessary.

The rates of Binance tokens reacted with a decrease to the actions of regulators. BNB dropped from $321 to $284 (11.5%), at the time of publication the coin is trading at $291. The BUSD exchange rate briefly lost its peg to the US dollar, dropping to $0.992, but recovered and hovered around $1-0.99.

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