Binance's CZ Welcomes 'Stress Test' as Exchange Resumes USDC Withdrawals
Changpeng "CZ" Zhao, founder and CEO of exchange giant Binance, welcomed the “stress test” of withdrawals on his exchange, addressing the surging user redemption requests from the platform in a tweet on Tuesday.
“Business as usual for us,” CZ said. “Some days we have net withdrawals; some days we have net deposits.”
We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.— CZ 🔶 Binance (@cz_binance) December 13, 2022
I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. 💪
Early Tuesday, surging outflows prompted Binance to halt user withdrawals in USDC stablecoin temporarily, adding to the speculation and anxiety among crypto investors already rattled by this year’s market turmoil.
But just before noon ET (17:00 UTC), Binance tweeted that the "$USDC withdrawals are back online."
The exchange had characterized the withdrawal pause as resulting from a swap transfer between the Paxos-issued Binance USD stablecoin and USDC that needed U.S. banks to be open.
#Binance is conducting a token swap involving $USDC. As a result, $USDC withdrawals are temporarily paused.$USDT & #BUSD withdrawals are available and unaffected. $USDC withdrawals will reopen once the token swap is completed. https://t.co/CxgCGBUJEA— Binance (@binance) December 13, 2022
Popular crypto analyst John Paul Koning speculated in a tweet that surging user withdrawals in USDC might have depleted Binance’s USDC reserves, and that it may have decided to halt withdrawals to wait for new supplies.
At press time, there are some $1.2 billion of USDC in Binance’s exchange reserves, according to blockchain data intelligence platform Nansen.
Binance delisted USDC with other stablecoins from its trading platform in September in a controversial move to consolidate trading pairs to USDT and Binance USD, the exchange’s own stablecoin issued by Paxos.
Withdrawals from Binance, the world’s largest exchange by trading volume, surged Monday amid growing concerns about its reserves at a time when investors are extremely wary about centralized exchanges given the swift collapse of rival exchange FTX. At one point Tuesday, net outflows – the difference of assets leaving and arriving to the exchange – reached $2.5 billion, Nansen data showed.
However, the exchange saw a sudden $1.5 billion net inflow in just an hour, according to data by Nansen.
Still, a net $3.8 billion of digital assets have left Binance in the past seven days, which is significant but not alarming in comparison to about $60 billion of digital assets deposited on the exchange.
“I think some retail investors are freaking out because of the FUDs over Binance, but it seems to me the total amount is not that big,” Hochan Chung, head of marketing at crypto research firm CryptoQuant, said. FUD stands for “fear, uncertainty and doubt” – a catch-all term used by crypto traders to signify speculation carrying a negative taint.