Over the last day, Binance — the leading cryptocurrency exchange globally by trading volume — has witnessed net withdrawals reaching roughly $831 million, as reported by blockchain analytics firm Nansen. This sharp decline stems from investor unease triggered by regulatory interventions targeting Paxos, the issuer behind Binance USD (BUSD), prompting users to pull back their assets from the platform.
According to Nansen’s blockchain insights, a staggering $2.8 billion in crypto assets exited Binance within 24 hours, overshadowing the $2 billion influx of deposits during the same timespan.
Regulators Clamp Down on BUSD Issuance
These evacuations come on the heels of the New York Department of Financial Services’ directive issued on Monday, compelling Paxos to cease issuing BUSD, a stablecoin valued at $16 billion. Moreover, an impending enforcement move by the U.S. Securities and Exchange Commission (SEC) further darkens the outlook. Branded under Binance, BUSD ranks as the third-largest stablecoin and fuels about 35% of Binance’s trading activities.
Historical Context of Binance Outflows
This recent withdrawal surge marks the heftiest single-day net outflow from Binance since November, eclipsing the December exodus triggered by fears surrounding Binance’s reserve transparency. Data from crypto asset investment firm 21Shares’ dashboard highlights how investor jitters have repeatedly shaken faith in the exchange.
Binance’s Reserves Under Pressure
The regulatory clampdown hits Binance hard, with BUSD representing a significant chunk of its reserve holdings. Holding about $13.4 billion in BUSD, it ranks second only to Tether’s USDT among Binance’s assets—a figure that equates to roughly 22% of the exchange’s total reported assets, which stand at around $60 billion, per Nansen.
Adding to that, Nansen’s data shows Binance’s own token, BNB, comprises nearly 5% of total assets at $3 billion. Yet, blockchain research group Arkham Intelligence suggests this number might be substantially understated, estimating the BNB holdings at a considerable $6.9 billion on Binance.
Snapshot of Binance Asset Breakdown
| BUSD | $13.4 billion | ~22% |
| BNB (Nansen) | $3 billion | ~5% |
| BNB (Arkham Intelligence) | $6.9 billion | ~11.5% |
| Total Binance Assets | $60 billion | 100% |
Liquidity Tests and Withdrawal Pressures
Walter Teng, Fundstrat’s VP for digital asset research, discussed these developments with CoinDesk via Telegram, noting that the sizable share of Binance-associated assets puts the exchange’s reserves under scrutiny. He warned that if Binance does not maintain a one-to-one backing for customer deposits, it could grapple with intense withdrawal demands.
“Liquidity on-chain for BUSD has already evaporated,” Teng explained. “The only workable path forward is redeeming BUSD for either U.S. dollars or an alternative stablecoin, to satisfy the surge in customer cash-outs.”
Binance CEO Reassures Market
In response to the turmoil, Binance’s CEO Changpeng Zhao, popularly known as “CZ,” took to Twitter to affirm the safety of customer funds.
#BUSD. A thread. 1/8
In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
— CZ �� Binance (@cz_binance) February 13, 2023
