Binance Briefly Pauses Withdrawals

Binance, the world’s largest crypto trade, introduced it’s pausing withdrawals of the USDC stablecoin following a spike in consumer exercise that resulted in $1.9 billion in withdrawals within the final day. That spike, according to CoinDesk, comes amid potential pink flags revealed in its current proof-of-reserve report.

However Binance introduced on Twitter early this morning that the trade is solely conducting a token swap with the USDC stablecoin, therefore the choice to pause consumer withdrawals. A token swap, per ByBit, “includes the trade of token sorts between two events, from one blockchain to a different.” The USDC is known as a stablecoin because it’s worth is 1 to 1 with the U.S. greenback.

Binance CEO Changpeng Zhao elaborated in a tweet that as Binance saw heightened user withdrawals of USDC on Sunday and within the early hours of Monday morning, the trade made the choice to pause withdrawals because the banks that would honor them have been closed. Reuters, citing information agency Nansen, reported that these withdrawals of USDC totaled $1.9 billion. Zhao additionally inspired customers to withdraw different secure cash, like BUSD.

“These are 1:1 conversions, no margin or leverage concerned. We may also attempt to set up extra fluid swap channels sooner or later. Within the meantime, be happy to withdraw some other secure coin, BUSD, USDT, and so forth,” Zhao added in a follow-up.

Whereas an trade pausing withdrawals isn’t inherently a foul factor, exchanges which have made that call previously haven’t fared effectively. Crypto trade Celsius paused withdrawals for its 1.7 million customers this previous June, earlier than filing for bankruptcy the next month. Binance, then again, paused withdrawals across the identical time as Celsius, however solely briefly as the worth of Bitcoin fell whereas claiming in a tweet that the pause was “as a result of a caught transaction inflicting a backlog.”

Binance’s present withdrawal pause comes as buyers are already skittish as fellow cryptocurrency trade FTX faces ongoing fallout.