Binance investors are rushing to withdraw their funds as fear, uncertainty, and doubt over BUSD stablecoin intensifies.
Binance, the largest cryptocurrency exchange in terms of daily trading volumes, has seen a surge of withdrawals over the last 24 hours.
According to the blockchain intelligence platform Nansen, customers withdrew around $2.8 billion in digital assets in the last 24 hours, while the inflows were worth approximately $2 billion.
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The data shared by analytics firm Dune revealed that on February 13th, Binance’s total net outflow was worth over $900 million. Based on the data, it is the largest net outflow since December 17th. At that time, customers reacted to Binance’s proof-of-reserve audits being removed from the financial auditor Mazar's website.
It is believed that the move from Binance investors came after US regulators launched several investigations into stablecoin issuer Paxos and its Binance-related stablecoin BUSD.
In response to a large number of withdrawals, Binance co-founder and CEO, Changpeng “CZ” Zhao took to Twitter to reassure investors that “FUD (fear, uncertainty, and doubt) is temporary.”
When asked about the situation, Binance’s spokesperson highlighted that all user funds are safe, echoing Binance CEO’s lengthy Twitter thread shared on February 13th.
On top of that, the Binance spokesperson noted:
We run a very simple business model — hold assets in custody and generate revenue from transaction fees. We take our responsibility as a custodian seriously and maintain 1:1 backing for every user asset.
On the same day, blockchain security firm PeckShield revealed that Paxos Treasury burned around 342 million BUSD tokens.
The Paxos-BUSD saga started on February 10th, when the news broke that the New York financial regulator had launched an investigation into stablecoin issuer. On February 13th, Paxos revealed that the New York Department of Financial Services ordered Paxos to stop issuing new BUSD tokens.
Moreover, the US Securities and Exchange Commission reportedly sent Paxos a Wells Notice, claiming that BUSD is unregistered security and thus means that Paxos violated investor protection laws.
