Post-Paxos Withdrawals And BUSD Redemptions Increase On Binance
In the last 24 hours, $788 million was sent out of the cryptocurrency exchange. However, Binance told that “Funds are SAFU.”
In the last 24 hours, a lot of money has been taken out of the cryptocurrency exchange Binance. This is likely because investors are scared after hearing that regulators are going to take action against Paxos and its stablecoin Binance USD.
At the same time, there have been a lot of redemptions of the BUSD token. According to Peckshield, 342 million BUSD have been burned in the last 24 hours.
On February 12, news came out that the U.S. Securities and Exchange Commission had warned Paxos that they might take action against them. It said that the stablecoin is an unregistered security, which Paxos doesn’t agree with.
Based on information from the blockchain intelligence platform Nansen, Binance had multichain token net outflows of $788.5 million in a 24-hour period. This was because outflows of $2.7 billion were more than the amount that came in, which was about $1.97 billion.
Dune analytics says it’s the biggest 24-hour net outflow since December 17, when Binance’s proof-of-reserve audits were taken down from the website of auditor Mazars.
A Binance representative said that “funds are SAFU,” which means that they are backed by a Secure Asset Fund for Users. This is the same thing that Binance CEO Changpeng “CZ” Zhao said earlier on Feb. 13.
The exchange recently had a sell-off in which “more than $1 billion” was taken out in just 12 hours, which the spokesperson said “was handled with ease.”
“We run a very simple business model — hold assets in custody and generate revenue from transaction fees,” Binance said, adding:
“We take our responsibility as a custodian seriously and maintain 1:1 backing for every user asset.”
The New York Department of Financial Services (NYDFS) told Paxos on Feb. 13 to stop issuing BUSD because of what the SEC did and what Circle, the company that made USD Coin, was said to have told them.
The outflows and token burns seem to be a response to these events, with crypto users cashing out of the stablecoin out of fear of more regulatory action.
Binance’s reserves have the most BUSD. They hold $14.4 billion worth of the stablecoin, which is about 90% of the market cap of $16.1 billion at the moment.
The cryptocurrency exchange also has about $60 billion in reserves, of which 22% are BUSD.
