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13 Dec, 2022 12:22

Major crypto exchange halts stablecoin withdrawals

Transactions with the dollar-pegged USDC token have been “temporarily” suspended, Binance says
Major crypto exchange halts stablecoin withdrawals

The world’s largest cryptocurrency exchange by trading volume, Binance, announced on Tuesday that it was pausing withdrawals of the stablecoin USDC. The platform has suffered huge outflows of funds following the collapse of the FTX exchange, according to media reports.

The move reportedly comes amid growing investor concerns about Binance’s stability in the wake of the bankruptcy of rival exchange FTX, which faces a criminal investigation in the US over the misuse of investor funds.

Binance explained the “temporary pause” of USDC withdrawals was due to a “token swap,” which means exchanging one cryptocurrency for another.

The cryptocurrency USDC is known as a stablecoin because it’s pegged one-to-one to the US dollar. It is used by investors to trade in and out of different cryptocurrencies without the need to move money back into dollars.

“On USDC, we have seen an increase in withdrawals,” Binance’s chief executive Changpeng Zhao tweeted on Tuesday at around 08:20 GMT.

According to Zhao, swapping USDC with two other crypto tokens – Paxos Standard and Binance USD – requires using traditional dollars at a bank in New York. “The banks are not open for another few hours. We expect the situation will be restored when the banks open,” he wrote.

Users can still withdraw other stablecoins including BUSD and tether, the CEO noted.

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