Binance, the world’s largest cryptocurrency exchange, is facing large-scale outflows of customers’ assets following the regulatory crackdown on the issuance of its BUSD stablecoin on Monday.
The New York Department of Financial Services (NYDFS) issued the order after the Securities and Exchange Commission (SEC) announced legal action against stablecoin partner Paxos for issuing what it deems unregistered securities in the form of various stablecoins, including BUSD.
Binance’s stablecoin partner Paxos ordered to cease minting BUSD cryptocurrency
Data supplied by Dune Analytics shows US$916mln in funds taken from Binance’s exchange wallets on Monday when the news broke, the largest single-day figure since November 2022.
Withdrawals cooled off on Tuesday, with around US$169mln removed from the exchange, but ramped up again today, with nearly US$500 in net outflows logged so far.
BUSD’s market capitalisation has steadily declined since the crackdown, with around US$1.5bn, or 9%, wiped from the market.
Binance’s BNB token, which is used to pay transaction fees on BNB Chain, dipped 6% to US$294 on Monday, but has recovered above US$300.
It’s not the firm’s first rodeo.
Net daily withdrawals exceeded US$800mln in December 2022 after a temporary pause on USDC withdrawals and concern over the exchange’s reserves spooked customers.
Outflows soared as high as US$1bn a day in November amid the fallout from the collapse of former rival exchange FTX.
Binance head Changpeng 'CZ' Zhao has regularly attested that the exchange has more than enough reserves to cover all potential withdrawals, although a full audit of the company has yet to be released to the public.
Though it didn’t constitute a full audit, Binance did release a proof-of-reserves report based on a snapshot review by accounting firm Mazars Group last December.
But Mazars’ report was taken down from the internet after the firm ceased working will all cryptocurrency companies.