Binance, the world’s largest cryptocurrency exchange, said on Tuesday that it is halting withdrawals of the stablecoin. usdc While it does “token swap”.
The move comes as investor concerns about the stability of Binance mount following the collapse of rival exchange FTX, as well as reports of a possible criminal investigation by the US government.
Binance said it has “temporarily paused” USDC withdrawals while “token swaps” are being carried out. This involves swapping one cryptocurrency for another without the need for fiat currency.
Binance CEO Changpeng Zhao tweeted on Tuesday that the exchange is seeing an increase in withdrawals of USDC, a cryptocurrency known as a stablecoin because it is correlated one-to-one. U.S. Dollar,
USDC is used by investors to trade in and out of various cryptocurrencies without the need to move the money back in US dollars. If traders are withdrawing USDC from Binance, it may need to be moved to another platform.
Zhao said that any transfers from the stablecoin known as PAX, as well as Binance’s own token BUSD to USDC, require routing through a bank based in New York that is not yet open. Zhao suggests users convert their PAX and BUSD to USDC in order to withdraw their funds from Binance.
A token swap could be a way to get more USDC faster while banks are closed for customers to resume withdrawals.
Zhao added that users can still withdraw to other stablecoins, including BUSD and Tether. Deposits are not affected, he said.
Binance has its own token called bnb It was trading down about 5% on Tuesday morning, according to data from CoinGecko.
When a crypto firm has to freeze withdrawals it is generally not good news. Over the summer, crypto firms including lender Celsius had to freeze withdrawals before filing for bankruptcy. There is no sign of any such trouble for Binance.
In the past 24 hours, Binance has seen an outflow of $1.6 billion from its platform, according to a tweet by crypto data company Nansen. Nansen said that Binance has more than $60 billion in assets on its platform.
The collapse of FTX and the arrest of its former CEO Sam Bankman-Fried has put crypto investors on edge with fears of further contagion across the industry.
Binance has been in the news since its decision to sell its stake in FTX’s self-issuing FTT digital token, which was preceded by the failure of the rival exchange.
Investors have demanded more transparency from Binance’s business. Last month, the company issued a proof of reserve, claiming a reserve ratio of 101%. This means that it has sufficient assets to cover customer deposits.
But critics have said that proof of reserves is not enough to warrant Binance’s collateral. Majors, the auditing firm Binance used to proof its reserves, said in its five-page report that the company “does not express an opinion or an assurance conclusion.”
Investors are also keeping an eye on a report from Reuters that US Justice Department prosecutors are delaying the conclusion of a criminal investigation into Binance. Reuters, citing four people familiar with the matter, said the investigation focused on Binance’s compliance with anti-money laundering laws. Binance responded: “Reuters got it wrong again.”
“We have no knowledge of the inner workings of the US Department of Justice, nor would it be appropriate for us to comment,” the company said in a tweet on Monday.