The possibility of a judicial investigation of Binance in the U.S. caused an unusual increase in the exchange’s volumes on Tuesday.
- Binance resumed USDC withdrawals after an 8-hour outage.
- Binance CEO acknowledges that the record number of withdrawals was “a stress test.”
Binance Capital Movements Before U.S. Investigation. Following the disclosure last Tuesday, December 13, of a report on the progress of a U.S. court case against Binance, there was a growing volume of withdrawals on the exchange.
According to analytics firm Nansen, withdrawals, especially from the USDC stablecoin, exceeded $1.9 billion in 24 hours. Many attribute the atypical demand for the stablecoin to the publication of a Reuters report suggesting the preparation of legal actions against Binance in the United States for alleged money laundering.
Binance reported on Twitter the same Tuesday that they would temporarily suspend withdrawals of the USDC stablecoin. This is due to difficulties in the token exchange required for such withdrawals. One of the reasons given Tuesday by Binance’s CEO, Changpeng Zhao, was that the PAX/BUSD to USDC exchange needed processing at a bank in New York, which was closed then.
#Binance is conducting a token swap involving $USDC. As a result, $USDC withdrawals are temporarily paused.$USDT & #BUSD withdrawals are available and unaffected. $USDC withdrawals will reopen once the token swap is completed. https://t.co/CxgCGBUJEA— Binance (@binance) December 13, 2022
This whole situation generated more anxiety in the market, considering that there were still reactions to the Reuters report. Binance came out in defense of its regulatory affairs unit. Withdrawals of the USDC stablecoin were suspended for eight hours and then reinstated by Binance. Shortly after, Zhao communicated to his 8 million followers this Wednesday.
“Things seem to have stabilized. Yesterday was not the highest withdrawals we processed, not even top 5. We processed more during LUNA or FTX crashes. Now deposits are coming back in.”
Zhao gives even more details and mentions that there were “some withdrawals” on Tuesday of $1.14 billion.
“Some days, we have net withdrawals; others, net deposits. For us, it’s business as usual. It’s a good idea to do a ‘stress test of withdrawals’ on each exchange on a rotational basis.”
Funds would also have entered Binance
Twitter user @Spidey_ElonFan, a content creator on Binance, claimed that over $6 billion had left Binance on Tuesday, the 13th. However, he highlights that there were more deposits than withdrawals that day. “A total volume of USD 12.6 billion! Many exchanges can’t even handle USD 100 million in volume!“.
The acute episode experienced by Binance may have increased investors’ fears. Especially given the difficulties experienced by the cryptocurrency sector after the crisis created by the collapse of FTX last month.