Binance, the world’s largest crypto exchange, announced on Tuesday that it was halting withdrawals of stablecoin USDC to enable it to conduct a “token swap.”
The decision followed heavy withdrawals from customers who are worried about Binance’s stability amid the FTX saga.
About the token swap: In a statement issued via Twitter, Binance explained that the token swap will enable customers to exchange cryptocurrencies without using fiat money.
Binance CEO, Changpeng Zhao, earlier tweeted that the exchange has noticed an uptick in withdrawals of USDC, a stablecoin famed for being tied one-to-one with the U.S. dollar.
#Binance is conducting a token swap involving $USDC. As a result, $USDC withdrawals are temporarily paused.$USDT & #BUSD withdrawals are available and unaffected. $USDC withdrawals will reopen once the token swap is completed. https://t.co/CxgCGBUJEA
— Binance (@binance) December 13, 2022
The upheaval: Justin Sun of Tron allegedly withdrew a total of $50 million from Binance which contributed to the market’s concern about Binance.
But he then tweeted a link to Etherscan that indicated he had redeposited $100 million USDC into the exchange, Sun attempted to allay market concerns.
The withdrawals: The last 24 hours saw withdrawals reach the $1.8 billion milestone according to on-chain data. According to Nansen data, Paxos and Huobi received a portion of this inflow, with a netflow of almost $162 million between the two exchanges.
- Investors can trade in and out of various cryptocurrencies using USDC without having to convert their funds back into US dollars.
- Trading USDC off Binance may be done so that they can transfer it to another exchange.
Zhao claimed that any conversions between the stablecoin PAX and Binance’s token BUSD into USDC require routing through a New York-based bank that is not yet operational.
- While the banks remain closed, Binance said it may be able to quickly add USDC through a token swap to resume withdrawals.
- Users can still withdraw other stablecoins like BUSD and tether.
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