Following the New York Department of Financial Services (NYDFS) crackdown on Paxos and stablecoin Binance USD, Binance cryptocurrency exchange has seen an increase in withdrawals over the past 24 hours.
The BUSD token has also experienced significant redemptions; according to Peckshield, 342 million BUSD were burned in the previous day.
News of potential enforcement action against Paxos by the US Securities and Exchange Commission surfaced on February 12. Paxos disputes the claim that the stablecoin is an unregistered security.
Binance recorded 24-hour multichain token net outflows of $788.5 million, as evidenced by data compiled from the blockchain intelligence platform Nansen, as a result of outflows of $2.7 billion exceeding inflows of roughly $1.97 billion.
Dune analytics data indicates that it is the largest 24-hour net outflow since Binance’s proof-of-reserve audits were taken down from auditor Mazars’ website on December 17.
According to a spokesperson for Binance, “funds are SAFU” — backed by a Secure Asset Fund for Users — reiterating what Binance CEO Changpeng “CZ” Zhao had previously stated on February 13.
The exchange recently experienced a sell-off, in which “more than $1 billion” was withdrawn in a 12-hour period, according to the exchange’s spokesperson, which it claims “was managed with ease.”
We have a very straightforward business model where we hold assets in custody and earn money from transaction fees, according to Binance.
“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) ordered Paxos to stop issuing BUSD on February 13 in response to the SEC’s action and a rumored tip from USD Coin issuer Circle.
The outflows and token burns appear to be a reaction to those occurrences, with cryptocurrency users selling their stablecoins out of concern for additional regulatory action.
The majority of the stablecoin, or $14.4 billion, or roughly 90% of its $16.1 billion market cap, is kept in Binance’s reserves.
The cryptocurrency exchange also has reserves worth about $60 billion, 22% of which are BUSD.
