When unfavorable reports spread, users flocked to the Binance exchange, prompting the firm to halt withdrawing stablecoin USDC.
According to Coindesk data on the morning of December 13, over 902 million USD was removed from Binance within 24 hours. This is the second largest withdrawal in the crypto market after the collapse of FTX last month, and the largest in Binance history in the previous 5 years, since its establishment.
Binance’s stablecoin BUSD had a sell-off on the same day. A substantial number of BUSD was traded to other stablecoins such as USDC, USDT, and so on, causing its value to plummet from its 1:1 USD anchorage.
By midday, BUSD had fallen to $0.99987, and Binance had abruptly chosen to halt USDC withdrawals. On Twitter in the afternoon of the same day (December 13, US time), creator Changpeng Zhao (CZ) announced: “We discovered that a substantial number of USDC has been removed from the exchange. However, the switch to USDC needs to be allowed. A New York bank. We can’t address the problem because banks aren’t open yet. Meanwhile, BUSD and USDT withdrawals continue as usual.”
The situation was still unresolved as of 10 p.m. yesterday. The value of the British pound has risen marginally to $0.9995. Binance’s 24-hour trading volume for the BUSD/USDT pair is $2 billion, second only to BTC/USDT and five times that of the ETH/USDT pair. This demonstrates that people are withdrawing a big number of assets from Binance. According to Nansen data, the amount taken from Binance in the previous 24 hours is greater than the total amount withdrawn from all centralized exchanges combined and nine times greater than the second position Bitfinex.
Reason
This is referred to as a FUD (fear, uncertainty, and doubt) attack by CZ. CZ allegedly made negative statements regarding the financial status of Coinbase and Grayscale, the world’s largest Bitcoin fund, at the beginning of the month.
Then, on December 12, Reuters reported that Binance may be the subject of an anti-money laundering probe by US authorities. The announcement sparked immediate turbulence on the trading floor. CZ says the preceding information is wrong, but provides no evidence. According to other WSJ sources, Binance’s reserve asset information appears suspect.
The alarm among users was heightened when Justin Sun, CEO of TRON and BitTorrent and one of the most powerful personalities in the cryptocurrency business, withdrew $50 million USD from Binance early on December 13. He recharged the money and stated on Twitter that it was only a “regular adjustment procedure” in the afternoon. However, towards the end of the day, 9x CEO withdrew another 100 million BUSD to his own pocket.
According to Nansen data, when money moves out of Binance, a big quantity of money is flowing into other exchanges. In the last 24 hours, Huobi has attracted an extra $162 million. Coinbase also reported 124 million USD put into the exchange. Many individuals are concerned about the turbulent condition in the cryptocurrency market following the unexpected drop of FTX last month. Even major brands like Binance are not immune to risk; when user concern is strong, substantial currency flows abruptly disappear from the exchange.
