Binance has seen a surge in withdrawals following the recent drama surrounding Paxos' BUSD stablecoin. According to blockchain analytics firm Nansen, Binance has had over $800M in net outflows over the last 24 hours.
As we previously reported, Circle allegedly sounded the alarm on stablecoin minting firm Paxos and told New York's Department of Financial Services (NYDFS) that Binance's stablecoin, BUSD, wasn't fully backed by USD. Following this news, BUSD lost almost $1B in market cap and Binance's BNB token is down ~6%, even as most of the crypto market is up on the day.
While the drama has caused some concern among Binance users, Binance CEO CZ has assured its customers that their funds are safe and everyone's tokens are fully backed. Of course, that's what every exchange's CEO says right before they halt withdrawals and file for bankruptcy.
Losing BUSD is a pretty big blow for Binance, as selling stablecoins can be quite profitable. But I think Binance will survive losing its stablecoin and will be able to handle this rush of withdrawals. It's not quite a bank run yet, and unless some more really bad news comes out about Binance, they'll still have plenty of reserves.
American regulators have been on a roll lately, with the SEC coming after Kraken last week and Coinbase in the crosshairs. Binance is no stranger to regulatory problems–they allegedly created Binance.US specifically to avoid scrutiny from the SEC. If you’re working at Binance, you have to be wondering if the SEC is coming for you once the NYDFS has their turn.