Binance, the world’s largest cryptocurrency exchange, said on Tuesday that it is suspending the release of the stablecoin USDC when doing a “token swap.”
The move comes as investor concerns grow about the stability of Binance following the collapse of the FTX exchange and reports of a possible criminal investigation by the US government.
Binance said it has “temporarily suspended” USDC withdrawals as it conducts a “token swap.” This involves exchanging one cryptocurrency for another without the need for fiat currency.
Changpeng Zhao, CEO of Binance, tweeted on Tuesday that the exchange is seeing an increase in the withdrawal of USDC, a cryptocurrency known as a stablecoin because it is linked to one and one. US dollars.
Investors use USDC to trade in various cryptocurrencies without the need to move money to US dollars. If a customer withdraws USDC from Binance, it can be transferred to another platform.
Zhao said that any transfer of USDC from the stablecoin known as PAX, as well as Binance’s token BUSD, requires routing through a New York-based bank that has not yet opened. The suggestion from Zhao is that users want to convert their PAX and BUSD to USDC to withdraw their money from Binance.
The token exchange could be a way for Binance to get USDC quickly when banks are closed to resume withdrawals for customers.
Zhao said users can still withdraw virtual coins including BUSD and tether. Deposits are not affected, he said.
The token of Binance is called BNB was trading up about 5% on Tuesday morning, according to data from CoinGecko.
It’s not always good news when the crypto industry goes on hiatus. Over the summer, crypto companies including lender Celsius will pause withdrawals before finally filing for bankruptcy. There are no signs of any problems for Binance.
In the past 24 hours, Binance has seen $1.6 billion in outflows from its platform, according to a tweet from crypto data company Nansen published early Tuesday. Binance has more than $60 billion of assets on its platform, Nansen said.
Jittery investors
The collapse of FTX and the arrest of former CEO Sam Bankman-Fried has crypto investors fearing expansion across the industry.
Binance has been in the spotlight since its decision to sell its self-issued FTT digital token FTX, which preceded the collapse of the exchange.
Investors have called for more insight from Binance transactions. Last month, the company issued a proof of deposit that it claims has a 101% safety rate. That means it has enough assets to cover customer deposits.
But critics have argued that proof-of-stake isn’t enough to provide the assurance of Binance contracts. Mazars, the research firm that Binance uses as proof of deposit, said in its five-page report that the company “does not express opinions or conclusions.”
Investors are also keeping tabs on news from Reuters that prosecutors at the US Department of Justice are delaying the end of a criminal investigation into Binance. Reuters, citing four people familiar with the matter, reported that the investigation focused on Binance’s compliance with anti-money laundering laws. Binance responded saying: “Reuters is wrong again.”
“We have no understanding of the inner workings of the US Department of Justice, nor would it be appropriate for us to comment if we did,” the agency said in a tweet on Monday.
