Binance facing wave of withdrawals and BUSD redemptions

After two regulators took action against BUSD issuer Paxos and ordered it to cease minting new BUSDs, users began to flee the crypto exchange Binance. Net outflows are over $788 million in the last 24 hours.

Related: SEC to sue Paxos over Binance stablecoin BUSD: WSJ

Although Paxos is no longer issuing new BUSD and all existing ВUSD are backed 1 to 1, users didn’t take this news well. According to Peckshield, 342 million BUSD tokens have been burned in the last 24 hours.

Blockchain analytics platform Nansen has demonstrated that Binance has also seen multichain net outflows of $788 million, with outflows of $2.71 billion exceeding inflows of $1.97 billion.

Yesterday, Binance’s CEO Changpeng Zhao (CZ) predicted after the news that the crypto exchange would see investors’ behavioral changes. Still, he said the exchange is ready and won’t stop supporting BUSD. Yet, CZ noted that regarding only BUSD redemptions and the future of what was the 3rd largest stablecoin on the market:

7/ Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.

— CZ Binance (@cz_binance) February 13, 2023

As for the general situation at Binance, CZ didn’t say anything, although there have already been similar large waves of users leaving the platform in the last 3 months.

Related: Binance addresses all recent FUD in blog post

According to Dune Analytics, the current outflow is the largest since December 17, when Mazars deleted the Binance reserves audit from the website, which was caused by public criticism.

Related: Big accounting firms won’t audit Binance

Binance spokesperson told Cointelegraph that withdrawals were managed with ease, adding:

We run a very simple business model — hold assets in custody and generate revenue from transaction fees. We take our responsibility as a custodian seriously and maintain 1:1 backing for every user asset.

Binance has a lot of BUSD – in fact, they have stablecoins worth $14.4 billion, which is about 90% of the total BUSD market value ($16.1 billion). In addition, Binance has around $60 billion worth of reserves, almost a quarter of which is BUSD.