With Binance currently facing a media storm, over $1.6 billion was withdrawn from the platform yesterday. Forced to suspend USDC withdrawals, Changpeng Zhao spoke out today to ease tensions: “FUD helps us grow”
Binance faces massive withdrawals
As Binance comes under fire – and from its critics – following Reuters’ revelations of the ongoing criminal investigation into the platform for money laundering, users have withdrawn around $1.6 billion in just 24 hours.
As a result, the exchange experienced difficulties in processing withdrawals in stablecoin USDC and was forced to temporarily suspend this feature. In the aftermath, Changpeng Zhao stepped in to reassure customers in the face of widespread panic:
On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open. 1/2
– CZ Binance (@cz_binance) December 13, 2022
The CEO of Binance explained that trading between PAX Dollar (PUSD) or BUSD stablecoins and Circle’s USDC requires the use of dollars and is handled by a bank in New York. Thus, he explains that “the situation will be restored when the banks open”.
This communication was not particularly convincing, for several reasons. Firstly, it is reminiscent of FTX’s justifications a few hours before the platform’s collapse. But above all, it is surprising: why does Binance have to use banking institutions to make transfers on the blockchain?
“We will also try to establish smoother exchange channels in the future,” CZ finally clarifies, telling its customers that they can “withdraw other stablecoins,” and mentions BUSD or USDT in particular.
CZ wants to calm down the FUD
The wave of withdrawals currently affecting Binance is part of a rather complicated context. Obviously, the reputation of centralized trading platforms is suffering from the fall of FTX. But above all, investors’ distrust is reinforced by the publication of a Reuters investigation into Binance’s legal affairs.
Finally, the publication of the exchange’s Proof-Of-Reserve did not necessarily reassure investors. On the contrary, many players in the ecosystem – such as the CEO of Kraken – have warned about the audit process, which is considered a “red flag”.
In another tweet, Changpeng Zhao called on Binance investors and users not to fall into “FUD”, the panic currently spreading around the platform. “FUD helps us grow, even if they are completely boring,” he added.
FUD helps us grow, even though they are thoroughly annoying.
You can FUD about someone without explicitly mentioning their name, which spreads awareness.
It also helps unite their supporters because it forms a common defense alliance.
Short thread. 1/4 https://t.co/PlxhqV5cZS
– CZ Binance (@cz_binance) December 13, 2022
At the time of writing, the Binance NBB is down over 7% so far this week, while Bitcoin (BTC) is up over 3% over the same period, as is the majority of the crypto market.
