GCR says bye to Binance, withdraws $40M USDT – should traders follow?

Key Takeaways:

  • Crypto trader GCR moved nearly $40 million USDT out of Binance.
  • Traders have plenty of reasons to distrust the exchange, including the suspiciously close ties with Binance.US
  • Liquidity issues and the stablecoin fiasco exacerbate the fears.
GCR says bye to Binance, withdraws $40M USDT -  should traders follow?

YEREVAN (CoinChapter.com) – A pseudonymous crypto trader that calls themselves GCR, an acronym for Gigantic-Cassocked-Rebirth, moved nearly 40 million USDT tokens out of their Binance address on Mar 6. The withdrawal took place in two separate transactions, as evidenced by the log below.

GCR, GCR says bye to Binance, withdraws $40M USDT –  should traders follow?
GCR transactions log. Source: Lookonchain on Twitter.com

Notably, GCR is an entity quite renowned in crypto circles. They correctly predicted the incoming bearish market in Nov 2021, selling at the top. Additionally, GCR made the right call shorting LUNA before the Terra implosion and moved their funds off the FTX exchange, correctly predicting the debacle.

Thus, a large move worth $40 million rightfully attracted the community’s attention. When asked about the meaning of their decision, GCR replied that they always advocated for self-custody. Additionally, GCR allegedly kept 10% of their funds on CEXs as collateral.

However, the trader did not further comment on the reason behind moving the funds out, saying the statement on CEX allocation was “not an attack on any individual CEX, just a general guidance.”

binance BUSD GCR

Should traders follow GCR and move out of Binance?

Meanwhile, GCR’s distrust in Binance could be justified, as the exchange has been involved in several scandals that could greatly influence the market. So, did the trader move the funds in time before another implosion?

Also read: Binance Almost Bye-Byes Tainted Stablecoin BUSD to Make Room for Rivals.

Binance’s BUSD stablecoin fiasco

The exchange’s stablecoin BUSD fell under scrutiny from the US Securities and Exchange Commission (SEC) earlier this year, involving Trust Company Paxos, which partially issued the BUSD. As a result, the exchange saw an unprecedented BUSD outflow worth nearly a billion dollars.

On Feb 15, the New York Department of Financial Services (NYDFS) 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.

Additionally, the SEC voiced its stance on Binance.US, calling the branch an ‘Unregistered Securities Exchange.’ The official spoke during a Voyager bankruptcy hearing on Mar 3, an insolvent crypto lender that Binance.US opted to purchase for $1 billion in Dec 2022.

The staff believes – based solely on the facts and circumstances currently known to the staff – that the offering and sale of VGX [voyager]token has the attributes of a securities transaction. The staff also believes that Binance.US is operating an unregistered securities exchange in the United States.

asserted the official on March 3.

After the BUSD fiasco, the world’s largest exchange decided to offset the damage by introducing an alternative: TrueUSD (TUSD). As a result, the exchange minted 180 million TUSD tokens between Feb 16 and 24.

Binance.US exacerbated the distrust.

Dirty Bubble Media, a substack publication focused on “popping frauds,” bashed Binance in Dec 2022. In detail, the outlet commented on Binance.US’ suspicious connection to its parent company.

According to DBM, Forbes possessed a leaked document stating that Binance.US was created as a ploy, a compliant player, to ease US government surveillance of the parent Binance. Further problems surfaced when Binance.US temporarily halted withdrawals of the Tether stablecoin (USDT).

It turned out that Binance.US apparently didn’t have enough USDT in its wallets to pay back customers for several hours. The USDT balance in the main Binance.US wallet dropped to its lowest level ever ($197,000) during this time period.

commented the publication.

While the exchange clearly stated that Binance.US allegedly “NEVER trades or lends” customers’ funds. However, Dirty Bubble Media dug deeper, revealing closer-than-expected ties between the ‘unrelated’ companies. While Binance.US experienced USDT liquidity issues, it “apparently had to pull money from the main exchange to pay back customer withdrawals.

Also read: Binance.US to acquire bankrupt Voyager, while its ties to parent exchange raise more FUD.

Was GCR aware of an upcoming Binance implosion? It is not clear. However, the trader has made the right calls in the past, exacerbating fears that he could be right about Binance as well. Thus, every trader should remember that keeping funds on a CEX comes with risks.

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