Binance Crypto Exchange Temporarily Halts USDC Stable Coin Withdrawals

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Binance, the world’s largest cryptocurrency exchange, suspended withdrawals from the USDC stablecoin on Tuesday as it conducted a “token swap”.

USDC withdrawals resumed approximately 8 hours after Binance first announced the suspension of withdrawals.

The move came amid growing investor concerns about Binance’s stability following the collapse of rival exchange FTX as well as a report of a possible criminal investigation by the US government.

Binance said earlier Tuesday that it had “temporarily suspended” USDC withdrawals while it conducted a “token swap.” It involves exchanging one cryptocurrency for another without the need for fiat currency.

Changpeng Zhao, CEO of Binance, tweeted that the exchange is seeing an increase in withdrawals of USDC, a cryptocurrency known as a stablecoin because it is pegged to the US dollar.

USDC is used by investors to trade in and out of different cryptocurrencies without the need to transfer money in US dollars. If traders are removing USDC from Binance, it could be to move it to another platform.

Zhao said any transfer to USDC from the stablecoin known as PAX, as well as Binance’s own BUSD token, requires routing through a New York-based bank that is not yet open. Zhao’s suggestion is that users seek to convert their PAX and BUSD to USDC in order to withdraw their funds from Binance.

A token swap could be a way for Binance to quickly get more USDC while banks are closed to resume withdrawals for customers.

Zhao said users can still withdraw other stablecoins, including BUSD and tether. Deposits are unaffected, he said.

Binance’s own token called BNB was trading down around 5% on Tuesday morning, according to data from CoinGecko.

It is normally not good news when a crypto firm has to suspend withdrawals. Over the summer, crypto firms, including lender Celsius, had to suspend withdrawals before finally filing for bankruptcy. There is no indication of such issues for Binance.

In the past 24 hours, Binance has seen $1.6 billion in outflows from its platform, according to a tweet from crypto data firm Nansen posted early Tuesday. Binance has over $60 billion in assets on its platform, Nansen said.

Nervous investors

But critics said the proof of reservations didn’t go far enough to give assurances about Binance’s guarantee. Mazars, the audit firm used by Binance for its proof of reserves, said in its five-page report that the company “expresses no opinion or assurance conclusion.”

Investors are also monitoring a Reuters report that prosecutors at the US Department of Justice are delaying the conclusion of a criminal investigation into Binance. Reuters, citing four people familiar with the matter, said the investigation is focused on Binance’s compliance with anti-money laundering laws. Binance responded by saying, “Reuters got it wrong again.”

“We have no idea of ​​the inner workings of the US Department of Justice, and it would not be appropriate for us to comment if we did,” the company said in a tweet on Monday.

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