LONDON: Binance, the world’s biggest crypto exchange, saw withdrawals of about $2 billion in the last 24 hours, blockchain data firm Nansen said on Tuesday, as the platform said it had “temporarily paused” withdrawals of the USDC stablecoin.

Binance, whose dominance of crypto was cemented by the bankruptcy of rival exchange FTX, last week tweeted a so-called proof-of-reserves report by audit firm Mazars. The report showed its holdings of bitcoin exceeded customer deposits on a single day in November.

The $1.9bn figure marks the largest daily outflow since at least June, the Nansen data showed, and accounted for the majority of the $2.2bn in etheruem-based withdrawals during the last seven days.

“Binance’s withdrawals are increasing due to the growing uncertainty about its reserves report,” a Nansen spokesperson said.

A spokesperson for Binance said: “People deposit and withdraw assets everyday for a variety of different reasons. User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free.

“We always have more than enough funds to fulfil withdrawal requests,” the spokesperson added.

Crypto news outlet CoinDesk reported earlier that Binance saw outflows of $902 million on Monday.

The exchange is already under pressure from authorities. Splits between US Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation focused on Binance’s compliance with US anti-money laundering laws and sanctions.

The report sparked a drop of almost four percent in Binance’s BNB token.

Token swap”

The Nansen data came as Binance halted withdrawals of USDC, citing a “token swap” _ where digital token holders exchange their crypto coins, typically over different blockchains.

Binance said in September it would automatically convert user balances and new deposits of USD Coin and two other stable coins into its own stablecoin, Binance USD.

Zhao said on Tuesday swapping USDC with two other tokens—Paxos Standard and Binance USD—requires using traditional dollars at a bank in New York. “The banks are not open for another few hours. We expect the situation will be restored when the banks open.”

Published in Dawn, December 14th, 2022