Binance Temporarily Pauses Withdrawals

Binance, the world’s largest crypto alternate, 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 doable crimson flags revealed in its current proof-of-reserve report.

But Binance introduced on Twitter early this morning that the alternate is just conducting a token swap with the USDC stablecoin, therefore the choice to pause consumer withdrawals. A token swap, per ByBit, “involves the exchange of token types between two parties, from one blockchain to another.” The USDC 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 alternate made the choice to pause withdrawals because the banks that might honor them had been closed. Reuters, citing knowledge agency Nansen, reported that these withdrawals of USDC totaled $1.9 billion. Zhao additionally inspired customers to withdraw different steady cash, like BUSD.

“These are 1:1 conversions, no margin or leverage involved. We will also try to establish more fluid swap channels in the future. In the meantime, feel free to withdraw any other stable coin, BUSD, USDT, etc,” Zhao added in a follow-up.

While an alternate pausing withdrawals is just not inherently a nasty factor, exchanges which have made that call previously haven’t fared nicely. Crypto alternate Celsius paused withdrawals for its 1.7 million customers this previous June, earlier than submitting for chapter the next month. Binance, however, 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 “due to a stuck transaction causing a backlog.”

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