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Crypto exchange Binance has seen massive withdrawals over the last week.
Binance, the world’s largest cryptocurrency exchange by trading volumes, has resumed the withdrawal of USDC stablecoin after pausing it temporarily for a few hours. On Tuesday, December 13, Binance had initially paused withdrawals due to a “token swap” and due to inadequate USDC reserves on the platform.
Binance and USDC Withdrawals
As per the data from Nansen, crypto exchange Binance holds a large majority of stablecoins worth $11.5 million in Paxos-issued BUSD. To increase its USDC reserves, the exchange made an effort to swap its BUSD holdings with USDC.
But Binance chief Changpeng Zhao explained that token swaps into USDC required routing funds through a New York bank that was not yet open. In a tweet on Tuesday, CZ noted:
“On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open”.
This limited the exchange’s ability to process transactions. As a result, Binance had no option but to halt USDC withdrawals momentarily so that they can conduct the token swap.
Binance Sees Massive Withdrawals on the Exchange
Earlier this week, reports arrived that the U.S. Department of Justice (DoJ) is mulling to slap criminal charges on Binance over allegations of money laundering. Since then, we have been seeing massive withdrawals taking place on the crypto exchange.
As per data from Nansen, Binance has seen net outflows of $3.6 billion over the last week in the period between December 7 to December 13. During the same period, the total outflows at the crypto exchange have been $8.8 billion while the total inflows stood at around $5.1 billion.
On Tuesday, December 13, Binance chief Changpeng Zhao also spoke about the withdrawals saying that it was “business as usual” for Binance. He noted:
“We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us. I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. It costs some network fees to run these “tests”. But keeps the industry healthy. Exchange business is simple”.
Another spokesperson for Binance assured that the company’s capital structure is absolutely debt free. So far, the crypto exchange has effectively handled withdrawals on its platform. By November-end, Binance was holding nearly $69 billion worth of digital assets on the platform.
Binance also released its Proof-of-Reserves report, however, it has faced questions on Binance’s health adding that it was short of a full financial audit. “We are working collaboratively with Mazars to share all relevant financial information with them so that they can verify the accuracy of all the data we have shared as well as our process for extracting the data. We are working on getting the next update for additional tokens published as soon as possible,” the Binance spokesperson said.