A blockchain data firm called Nansen said on Tuesday that $1.9 billion has been taken out of Binance in the last 24 hours. This comes after the world’s largest cryptocurrency exchange said it had “temporarily paused” withdrawals of the USDC stablecoin.
Users and government officials are very interested in how crypto exchanges like Binance and its now-defunct rival FTX handle customer deposits. On Tuesday, the U.S. Securities and Exchange Commission said that FTX founder Sam Bankman-Fried had tricked investors out of money.
The fall of FTX cemented Binance’s position as the biggest cryptocurrency exchange. Last week, Mazars, an auditing firm, tweeted a so-called “proof-of-reserves” report. The report showed that on a single day in November, it had more bitcoin than customer deposits.
Related:Â Binance’s CEO says that money is coming back to the exchange.
The $1.9 billion in withdrawals of tokens based on the Ethereum blockchain was the most money taken out in one day since June 13, Nansen data showed. It was also the most money taken out in the last week.
“Binance’s withdrawals are going up because its reserve report is becoming less clear,” a Nansen spokesperson said.
The CEO of Binance, Changpeng Zhao, said on Twitter that the withdrawals were “business as usual.” “Today, some money was taken out (about $1.14 nett). This has happened before. Some days, we make more money than we take out, and some days, the opposite is true.
Earlier, a Binance representative said that the company always had “more than enough money” to meet withdrawal requests. “At Binance, all user assets are backed 1:1, and Binance has no debt,” the person said.
When asked if Binance had enough USDC to meet USDC withdrawal requests, the person said that it might need to move funds from offline “cold” digital wallets to online “hot” digital wallets, convert stablecoins from one another, or do network upgrades, which can sometimes cause delays.
Around 16:54 GMT, Binance said in a tweet that USDC withdrawals were back up and running.
CoinDesk, a crypto news site, said earlier that $902 million left Binance on Monday.
The government is already putting pressure on Binance. Reuters reported on Monday that disagreements between U.S. Department of Justice prosecutors are delaying the end of a long-running criminal investigation into whether Binance is following U.S. laws and sanctions against money laundering.
Traders told Reuters that the report caused Binance’s BNB token to drop by almost 4%.
TOKEN SWAP
Binance stopped withdrawals of USDC earlier on Tuesday, citing a “token swap.” A “token swap” is when people with digital tokens trade their crypto coins, usually across different blockchains.
“Withdrawals from USDC have gone up,” Binance’s Zhao tweeted around 8:20 GMT.
In September, Binance said it would automatically convert user balances and new deposits of USD Coin and two other stablecoins into Binance USD, its own stablecoin.
Zhao said on Tuesday that you have to use real dollars at a bank in New York to swap USDC for two other tokens, Paxos Standard and Binance USD. “It will be a few hours before the banks are open.” “We think things will be back to normal when the banks open.”
Related: Colin Wu Responds to Binance’s POR Audit Notification
USDC, which is made by the U.S. company Circle, is the second-biggest stablecoin in the world. Circle’s chief strategy officer and head of global policy, Dante Disparte, said that when assets are swapped, like Binance did with USDC, there will be “challenges” with liquidity and withdrawals.
“A feature of liquid digital currencies should be that they can be redeemed at any time for the same amount,” Disparte added.
