BERLIN (CoinChapter.com) — Binance USD (BUSD), a Binance-backed stablecoin, has been at the center of a frenzy as it sees massive withdrawals from various exchanges.
According to Nansen data, Binance witnessed $831 million worth of BUSD outflows from its exchange in 24 hours, the biggest daily outflow since November 2022. This showed uneasiness among investors about holding BUSD.
Whales and sharks were at the forefront of the said BUSD withdrawals, per Santiment data. The on-chain analytics platform found that addresses holding between 1,000 and 10 million BUSD tokens withdrew almost $208 million worth of stablecoin from exchanges.
“This is an astounding level of stablecoin dropping, especially while the other three stablecoins (Tether, USD Coin, Dai) have been seeing big holder accumulations,” it said.
Why are Investors Dumping BUSD?
The outflows picked momentum primarily after the US Securities and Exchange Commission (SEC) filed a lawsuit against Paxos. This crypto firm issues BUSD and lists the stablecoin on its native exchange itBit. The SEC believes BUSD to be a security, which theoretically makes Paxos a securities rule breaker.
Earlier this week, the New York Department of Financial Services (NYDFS) also issued a consumer alert “due to several unresolved issues related to Paxos’ oversight of its relationship with Binance.” The regulator acted in response to Binance rival Circle’s claim that its BUSD supply is not 100% backed by the US dollar.
Paxos stopped issuing BUSD tokens in response to the SEC lawsuit but noted that it is ready to file litigation against the US regulator. On the other hand, crypto exchange Crypto.com delisted the BUSD token altogether, serving as another major blow to the stablecoin.
However, the news failed to disbalance BUSD’s peg to the US dollar. As of Feb 15, the stablecoin was trading for almost $1.
