Binance Issues Temporary Pause on USDC Withdrawals

Binance paused withdrawals of stablecoin USDC Tuesday (Dec. 13) as it conducted a “token swap.”

“On USDC, we have seen an increase in withdrawals,” Chanpeng Zhao, CEO of the world’s largest cryptocurrency exchange, tweeted at 3:21 a.m.

“However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours.”

PAX/BUSD refers to two other digital tokens: Paxos Standard and Binance USD.

Zhao added that these are “1:1 conversions, no margin or leverage involved.” He said Binance will eventually try to establish more fluid swap channels, and said users were free to withdraw any other stablecoins.

The move comes as Binance finds itself in the spotlight following the collapse of rival crypto exchange FTX, as well as recent reports of a U.S. government investigation into its activities.

A report by Reuters Monday said a probe into the company was still underway, though prosecutors were apparently at odds on whether to charge the exchange — along with Zhao and other executives — now or take more time to review evidence.

Either way, the report indicates Binance is being investigated for unlicensed money transmission, conspiracy and criminal sanctions violations.

A Binance spokesperson told PYMNTS that regulators are performing a “sweeping review” of every crypto company to deal with many of the same issues described in the Reuters report.

Binance is also a crucial supporting character in the ongoing FTX saga. When FTX’s collapse began to unfold last month, Zhao offered to rescue the firm via an acquisition. But after reviewing FTX’s finances, Binance withdrew from the deal. FTX declared bankruptcy days later.

As we wrote Monday, Binance now finds itself looking to solidify its market position as the cryptocurrency sector consolidates, “casting light — and questions — on its bookkeeping and balance sheet.”

As reported by PYMNTS, some industry watchers felt Binance’s recent audit did not go far enough in terms of transparency.

The firm that reviewed Binance’s finances, Mazars, has said they “make no statement regarding the appropriateness” of its work. The Mazars report only looked at Binance’s bitcoin holdings and liabilities.

“Had we performed additional procedures, other matters might have come to our attention that would have been reported,” the auditors said in their statement.

“It is hardly a reassuring conclusion for retail investors who trusted their money with the exchange or plan to,” PYMNTS argued.

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