Binance reserves lost $2.3B following BUSD debacle Binance reserves lost $2.3B following BUSD debacle
The SEC issued a notice to Binance USD issuer Paxos on Feb. 13 to stop further BUSD minting.
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Updated: Feb. 17, 2023 at 5:51 pm UTC
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Investors withdrew around $2.3 billion worth of Binance USD (BUSD) from Binance within four days after the Securities and Exchange Commission (SEC) issued a warning to BUSD issuer Paxos.
The SEC requested Paxos to stop further BUSD production on Feb. 13. At the time, Binance held a little over 14.4 billion BUSD tokens in its reserves. After the SEC intervention, the exchange’s BUSD pool rapidly started to shrink.
Between Feb. 13 and Feb. 17, Binance’s BUSD holdings recorded a 16% decrease and fell to around 12.1 billion tokens.
The SEC vs. BUSD
After the SEC issued a Wells notice to Paxos on Feb. 13, Binance CEO Changpeng Zhao (CZ) responded to the SEC by saying that “Paxos will continue to service the product and manage redemptions.”
However, on the same day, Paxos announced that it would stop further BUSD minting starting from Feb. 21, 2023. In the meantime, the BNB token responded to this news by losing over 9% of its value.
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Zeynep Geylan
Zeynep is an academic who turned to crypto in 2018. Originating in social sciences, she is especially interested in the social impact of blockchain and cryptocurrencies and strongly believes in their transmuting power.
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BUSD is a stablecoin issued by Paxos in partnership with Binance..
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Paxos
Paxos Trust Company, LLC is a regulated blockchain infrastructure company building transparent and transformative financial solutions.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.