Binance’s withdrawals spike following regulatory crackdown on Paxos issued-BUSD

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Key Takeaways

  • Binance witnessed $831 million of net outflows in the past 24 hours
  • Users withdrew around $2.8 billion of digital assets in the last 24 hours from Binance, 
  • 342 million BUSD has been burned over the last 24 hours.
  • Paxos was ordered by SEC to stop issuing BUSD.

World’s leading crypto exchange Binance is now witnessing a spike in withdrawals in the last 24 hours. The surge in withdrawals comes after crypto firm Paxos was ordered by the Securities and Exchange Commission(SEC) to stop issuing Binnace stablecoin-BUSD.

As per stats disclosed by Blockchain analytics firm Nansen, Binance witnessed $831 million of net outflows in the past 24 hours. Data shows that users withdrew around $2.8 billion of digital assets in the last 24 hours from Binnace, outweighing the $2 billion of deposits during the same period.

Dune data states that it is the largest 24-hour net outflow since December 17, when concerns about Binance’s ​​proof-of-reserve audits spiked. According to Peckshield, 342 million BUSD has been burned over the last 24 hours.

As per data, Jump Trading and Wintermute are among the largest firms moving funds from Binance in the past seven days. Reportedly, net withdrawals from Binance by crypto wallets tied with Jump reached $146 million of digital assets over the past seven days.

According to Nansen analyst Andrew Thurman, Jump’s net withdrawals include $102 million in Binance USD, $14 million of Tether’s USDT, and $10 million of ether (ETH). Wintermute also withdrew a significant amount of funds, including $8.5 million of wrapped bitcoin (wBTC) and $5.5 million of Circle’s USDC stablecoin from the exchange in the past week.

The regulatory crackdown on the Paxos-issued Binance USD has triggered the surge in withdrawals. Earlier this week, the New York Department of Financial Services (NYDFS) had ordered Paxos Trust to stop the issuance of dollar-pegged Binance USD stablecoin.

United States Securities and Exchange Commission (SEC) had issued a Wells notice to Paxos alleging that Binance USD is an unregistered security. On February 13, SEC ordered Paxos to “cease minting Paxos-issued BUSD” while reinstating its requirements for tokens under its regime to be fully backed by cash or cash equivalents.

The latest development involving surge in withdrawals from Binance comes amid reports that Circle had earlier alerted NYDFS in 2022 that Binance’s reserves were insufficient to support its tokens, seemingly including stablecoin Binance USD.

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Saniya Raahath
Saniya Raahath

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