Binance Suspends USDC Withdrawals; Withdrawals reach $1.9 billion, says Nansen

Binance had withdrawals of US$ 1.9 billion (R$ 10 billion) in the last 24 hours, said this Tuesday (13) the blockchain analysis firm Nansen, after the world’s largest digital currency exchange announced a temporary suspension of USDC stablecoin withdrawals.

Binance, whose dominance in the cryptocurrency market was cemented by the collapse of the FTX, last week released a proof of reservations report by auditing firm Mazars. It showed that the exchange had a position in bitcoins that exceeded customer deposits in one day in November.

The data was released after Binance suspended USDC withdrawals, citing a “token exchange,” where holders of digital tokens exchange their cryptocurrencies, typically through different blockchains.

The $1.9 billion ethereum-based withdrawals mark the largest 24-hour withdrawal flow since June 13, according to Nansen data, and accounted for the bulk of funds that were withdrawn in the past seven days.

“Withdrawals on Binance are growing because of growing uncertainty about the reserves report,” said a Nansen spokesperson.

A Binance representative stated that “People deposit and withdraw assets every day for a variety of reasons. Users’ assets on Binance are all backed 1:1 and Binance’s capital structure is debt-free.”

“We always have more than enough resources to honor withdrawal requests,” the spokesman said.

Asked whether Binance had enough USDC to fulfill requests for withdrawals on the stablecoin, the spokesperson said, “From time to time we may need to replenish online wallets with our offline wallets, convert one stablecoin to another, or perform routine maintenance to update network, all of which can cause short delays. Business is normal.”

Cryptocurrency news site CoinDesk earlier reported that Binance recorded outflows of $902 million on Monday.

“In USDC, we saw an increase in withdrawals,” said Binance Chief Executive Changpeng Zhao on Twitter this Tuesday.

Binance announced in September that it will automatically convert user balances on new deposits of USD Coin and two other stablecoins into its own stablecoin, Binance USD.

Zhao said on Tuesday that exchanging USDC for two other tokens — Paxos Standard and Binance USD — requires using traditional dollars at a bank in New York. “We hope that the situation will be restored when the banks open.”