Binance Loses Nearly $1 Billion in Single Day After Regulatory Halt of Stablecoin
The cryptocurrency market was dealt a blow when news broke out that the crypto firm Paxos, issuer of BUSD stablecoin, was ordered by Sec regulators to halt the minting of BUSD. In response, a massive outflow of digital assets from the Binance was observed, totaling nearly $1 billion in a single day.
Massive Withdrawal from Binance
According to on-chain data from the Dune Analytics, more then $900 million in crypto assets were withdrawn from Binance on February 13.
On-chain data from @DuneAnalytics shows that nearly $1 billion in #crypto was withdrawn from @binance in the past 22 hours after @PaxosGlobal was forced to cease minting $BUSD. pic.twitter.com/bFLinafTWs
— Ali (@ali_charts) February 14, 2023
whales have also been moving their stablecoins and avoiding BUSD as the number of addresses holding 1,000 to 10,000,000 BUSD has been rapidly declining. Data from the on-chain and social metrics platform Santiment reveals that $208 million worth of the coin was dumped.
SEC Lawsuit Against Paxos
The cause of this dump is the lawsuit that Paxos is facing from the SEC, which claims that BUSD is a security and Paxos was illegally selling it. Binance CEO Changpeng Zhao has warned that if the courts side with the SEC, it would have far-reaching impacts on the development of the blockchain and crypto industry in affected jurisdictions.
The suspension of Kraken’s staking services and the SEC settlement added to the existing sentiment of fear, uncertainty, and doubt (FUD) that has been prevalent in the crypto market. This has led to a significant number of investors exiting the market, which has resulted in a brief drop in the global crypto market capitalization below the psychological level of $1 trillion.
The regulatory halt of Binance’s stablecoin has resulted in a massive withdrawal of digital assets from the platform and a decline in BUSD holdings. It remains to be seen how this will all play out and what its consequences will be for the future of the crypto industry.
