Following FTX, Binance too? ... Tension over temporary suspension of USDC withdrawals

World's Largest Exchange Binance Suspends Withdrawals, Resumes After 8 Hours
Uncertainty Spreads Due to Lessons from FTX Incident... Binance Coin Weakens

[Image source=Reuters·Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The world's largest virtual asset exchange, Binance, has temporarily suspended withdrawals of virtual assets, raising concerns about safety. Amid the ongoing aftershocks of the global exchange FTX's bankruptcy, the domestic market is also on high alert.

According to industry sources on the 14th, Binance announced on Twitter the previous day that it would temporarily suspend withdrawals of the stablecoin USDC during a token swap, but resumed withdrawals after 8 hours. A token swap refers to exchanging one virtual asset for another.

Binance CEO Changpeng Zhao explained that swapping Binance-issued stablecoin BUSD and another stablecoin PAX to USDC requires going through a bank located in New York. He added that the bank was closed for several hours, but once it reopened, the USDC withdrawal suspension issue was expected to improve. He also stated that Binance plans to establish various swap channels in the future and that withdrawals of BUSD, Tether (USDT), and others remain possible.

This incident reveals that investors are attempting to withdraw funds from Binance by swapping BUSD and PAX to USDC. In a situation where distrust toward virtual asset exchanges has increased due to the FTX incident, and with allegations of money laundering investigations targeting Binance's management and suspicions about opaque financial structures, such phenomena have emerged. CEO Zhao said, "We have confirmed an increase in USDC withdrawals."

Although withdrawals resumed after 8 hours, the suspension of USDC withdrawals heightened anxiety in the coin market. Reports indicated that $1.6 billion (approximately 2.0734 trillion KRW) was withdrawn from the Binance platform within a day. Binance's assets are known to exceed $60 billion, so this is not considered a major hemorrhage, but with the aftershocks of the FTX incident continuing, caution remains high.

The price of Binance-issued virtual assets, ranked 5th in market capitalization among all coins, is also declining. According to the global virtual asset market data site CoinMarketCap, as of 10:01 AM that day, the price of Binance Coin was $273.02 (approximately 353,560 KRW), down 0.88% from the previous day. Compared to a week ago, it has dropped nearly 6%. The price had fallen to $257.9 the previous day. This contrasts with the rise in prices of most virtual assets such as Bitcoin and Ethereum, following a slowdown in the increase of the U.S. November Consumer Price Index (CPI).

The domestic industry is also closely monitoring the situation. Currently, Binance Coin is listed on domestic KRW market exchanges Bithumb and Korbit, where it showed declines of over 2% and 3%, respectively. A Bithumb official said, "There were signs during the FTX incident, but at some point, the impact suddenly intensified," adding, "We are monitoring the situation closely." A Korbit official also stated, "We are internally watching the Binance situation."

This content was produced with the assistance of AI translation services.