Binance withdrawals and BUSD redemptions surge post Paxos crackdown

Cryptocurrency exchange Binance has recorded a spike in withdrawals over the past 24 hours as investors appear spooked by the recent news of regulatory action against Paxos and its Binance USD (BUSD) stablecoin.

At the same time, the BUSD token recorded significant redemptions, with 342 million BUSD burned in the last 24 hours, according to Peckshield.

On February 12, it became known that the Securities and Exchange Commission (SEC) notified of possible enforcement actions against Paxos. It claimed that the stablecoin was an unregistered security, which Paxos denies.

The data is collected from the Nansen blockchain analytics platform. show Binance recorded a 24-hour net multi-chain token outflow of $788.5M driven by a $2.7B outflow that outpaced an inflow of about $1.97B.

According to Dune analytics datait is the largest 24-hour net churn since December 17, 2022, when its confirmatory audits were removed from Mazars’ auditor’s website.

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Following action by the SEC and a message from Circle, the issuer of USD Coin (USDC), the New York City Department of Financial Services (NYDFS) ordered Paxos to stop issuing BUSD on Feb. 13.

The outflow and burning of tokens is a seeming reaction to events when cryptocurrency users cash out a stablecoin due to fears of further regulatory action.

Binance’s reserves contain the largest amount of BUSD, which contains $14.4 billion worth of stablecoin, or about 90% of the current market capitalization of $16.1 billion.

The cryptocurrency exchange also has around $60 billion in reserves, of which 22% is BUSD.

Binance told Cryptooshala that “the funds are SAFUs” backed by the Safe Asset Fund for Users, echoing what Binance CEO Changpeng “CZ” Zhao said earlier on Feb. 13.

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