The crypto exchange Binance has seen a flurry of withdrawals in the past 24 hours as investors seem spooked by recent news of regulatory action against Paxos and its stablecoin Binance USD (BUSD).
At the same time, the BUSD token has registered significant redemptions; 342 million BUSD have been burned in the last 24 hours according to Peckshield.
#PeckShieldAlert ~342M $BUSD have been burned at Paxos Treasury within the last 24 hours, $BUSD MarketCap: $15.8Bhttps://t.co/BMeVokqVE6 pic.twitter.com/hJdnixxbtD
— PeckShieldAlert (@PeckShieldAlert) February 14, 2023
#PeckShieldAlert. ~342 million BUSD has been burned in the Paxos Treasury in the last 24 hours. BUSD Market Cap: $15.8Bn https://t.co/BMeVokqVE6 pic.twitter.com/hJdnixxbtD
On February 12, the news broke that the The US Securities and Exchange Commission had notified a possible enforcement action against Paxos. He claimed that the stablecoin is an unregistered securitya claim Paxos denies
Data collected from the Nansen blockchain intelligence platform shows that Binance posted 24-hour net multi-chain token outflows of $788.5 million, caused by outflows of $2.7 billion exceeding inflows of about $1.97 billion.
According to Dune analytics data, is the largest 24-hour net outflow since Dec. 17, when Binance’s proof-of-reserve audits were removed from auditor Mazars’ website.
A Binance spokesperson told Cointelegraph that “the funds are safe” – backed by a User Safe Asset Fund.– echoing what Binance head Changpeng “CZ” Zhao said earlier on Feb. 13.
The spokesperson added that The exchange recently had a sale with “over $1 billion” withdrawn in a 12-hour period, which it claims “was handled with ease.”.
“We run a very simple business model: hold assets in escrow and generate revenue from transaction fees”said Binance, adding:
“We take our responsibility as custodians seriously and maintain 1:1 support for every user asset.”
Following SEC action and a notice from the issuer of USD Coin (USDC) Circle, the New York Department of Financial Services (NYDFS) ordered Paxos to stop issuing BUSD on February 13.
Exits and token burns appear to be a response to those events; cryptocurrency users withdraw money from the stablecoin in fear of new regulatory measures.
Binance reserves hold the largest amount of BUSD: it has USD 14.4 billion of the stablecoinor about 90% of the current $16.1 billion market cap.
The crypto exchange also has reserves worth about $60 billion, 22% of which is made up of BUSD..
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