Binance, the world’s largest cryptocurrency exchange, said it is pausing withdrawals for the USDC stablecoin while it conducts a “token swap.”
The move comes as investor concerns grow over Binance’s stability following the collapse of rival exchange FTX, as well as a report of a possible US government criminal investigation.
In a statement Tuesday, Binance said it has “temporarily paused” USDC withdrawals while it conducts a “token swap.” This involves exchanging one cryptocurrency for another without the need for fiat currency.
Mr. Changpeng Zhao, CEO of Binance, tweeted on Tuesday that the exchange is seeing an increase in withdrawals from USDC, a cryptocurrency known as a stablecoin because it is pegged one-to-one to the US dollar.
Investors use USDC to trade in and out of different cryptocurrencies without the need to move money back into US dollars. If traders are removing USDC from Binance, it could be to move it to another platform.
Mr. Zhao said that any transfer to USDC from the stablecoin known as PAX, as well as Binance USD’s own token, BUSD, requires routing through a New York-based bank, which is not yet open. Zhao’s suggestion is that users are looking to convert their PAX and BUSD into USDC in order to withdraw their funds from Binance.
A token swap could be a way for Binance to get more USDC quickly while banks are closed to resume withdrawals for clients.
Binance Coin (BNB) is down 5.3% at $286, while BUSD has lost 0.04% to sell at $0.0996.
The collapse of FTX and the arrest of its former CEO, Sam Bankman-Fried, has crypto investors on edge for fear of further industry-wide impact.
Binance has been in the spotlight since its decision to sell its stake in FTX’s self-issued FTT digital tokens, which preceded the failure of the rival exchange. It has also faced concerns over reports that US Justice Department prosecutors are delaying the conclusion of a criminal investigation into Binance.