LONDON: Blockchain data firm Nansen said on Tuesday that Binance, the largest cryptocurrency exchange in the world, had “temporarily paused” withdrawals of the USDC stablecoin, which resulted in approximately $2 billion in withdrawals in the last 24 hours.
A so-called proof-of-reserves report from audit firm Mazars was recently tweeted by Binance, whose dominance of the cryptocurrency market was strengthened by the bankruptcy of rival exchange FTX. According to the report, on one day in November, its bitcoin holdings exceeded customer deposits.
According to Nansen data, the $1.9 billion figure represents the largest daily outflow since at least June and accounted for the majority of the $2.2 billion in etheruem-based withdrawals over the past seven days.
A spokesperson for Nansen stated, “The growing uncertainty about its reserves report is increasing the reason for Binance’s withdrawals.”
Binance’s spokesperson stated: Assets are deposited and withdrawn on a daily basis for a variety of reasons. Binance’s capital structure is debt-free, and all user assets are backed 1:1.
“We generally have a sizable amount of assets to satisfy withdrawal demands,” the representative added.
CoinDesk, a source of cryptocurrency news, said that on Monday, $902 million left Binance.
Authorities are already exerting pressure on the exchange. The conclusion of a long-running criminal investigation into Binance’s compliance with US anti-money laundering laws and sanctions is being held up by disagreements among prosecutors at the US Department of Justice.
The report caused the BNB token on Binance to drop by almost 4%.
Token exchange
The Nansen data came at the same time that Binance stopped USDC withdrawals, citing a “token swap,” in which holders of digital tokens exchange their crypto coins, typically over various blockchains.
In September, Binance stated that it would automatically convert USD Coin and two other stable coins’ user balances and new deposits into its own stablecoin, Binance USD.
On Tuesday, Zhao stated that a New York-based bank is required to exchange USDC for Paxos Standard and Binance USD, two additional tokens. The banks are not open for an additional couple of hours. When the banks open, we anticipate the situation will return to normal.
