Jitters as Binance Suspends USDC Withdrawals

By Adedapo Adesanya

Binance, the world’s largest cryptocurrency exchange, said it is pausing withdrawals of the stablecoin USDC while it carries out a “token swap.”

The move comes as investor concerns grow about Binance’s stability following the collapse of rival exchange FTX as well as a report of a potential criminal investigation from the United States government.

In a statement on Tuesday, Binance said that it has “temporarily paused” USDC withdrawals while it does a “token swap.” This involves swapping one cryptocurrency for another without the need for fiat currency.

Mr Changpeng Zhao, CEO of Binance, tweeted on Tuesday that the exchange is seeing an increase in withdrawals of USDC, a cryptocurrency known as a stablecoin because it is pegged one-to-one with the US Dollar.

USDC is used by investors to trade in and out of different cryptocurrencies without the need to move money back into U.S. dollars. If traders are withdrawing USDC from Binance, it could be to move it onto another platform.

Mr Zhao said that any transfers into USDC from the stablecoin known as PAX, as well as Binance’s own token Binance USD, BUSD, require routing through a bank based in New York, which is not yet open. The suggestion from Zhao is that users are looking to convert their PAX and BUSD into USDC in order to withdraw their funds from Binance.

A token swap could be a way for Binance to get more USDC quickly while the banks are closed in order to resume withdrawals for customers.

Binance Coin (BNB) is down by 5.3 per cent to $286 while the BUSD has shed 0.04 per cent to sell at $0.0996.

The collapse of FTX and the arrest of its former CEO, Sam Bankman-Fried, has crypto investors on edge with fears of further impact across the industry.

Binance has been in the spotlight since its decision to sell its stake in FTX’s self-issued FTT digital tokens, which preceded the failure of the rival exchange. It has also faced worries about reports that the US Department of Justice prosecutors are delaying the conclusion of a criminal investigation into Binance.