Binance's dollar-pegged token is bleeding, seeing $6 billion in outflows in a month as the crypto crackdown intensifies
- Binance's dollar-pegged stablecoin BUSD suffered $6 billion in outflows last month, according to an FT report.
- The cash withdrawals come as investors fret over US regulators' crackdown on the crypto industry.
Binance's dollar-pegged coin is running into trouble as US regulators crack down on the crypto industry.
Last month, investors pulled more than $6 billion from the Binance-branded BUSD token, according to a Financial Times report.
BUSD is the world's third largest stablecoin behind tether and USD, with a market cap of over $10 billion as of Wednesday, according to CoinMarketCap. It is pegged to the dollar on a one-to-one ratio.
The withdrawals come as US market regulators tighten their grip on the digital-asset sector following FTX's collapse. Just last month, the New York Department of Financial Services ordered crypto firm Paxos to stop minting the Binance-branded token as it faces a lawsuit from the Securities and Exchange Commission. The lawsuit claims Paxos' offering of BUSD was an unregistered security.
It prompted crypto exchange Coinbase to suspend trading in BUSD, citing that it "no longer met our listing standards."
Binance chief Changpeng Zhao has downplayed the link between his exchange and the token carrying its branding. "BUSD is not issued by Binance," Zhao said during a Twitter Spaces last month. "We have an agreement to let [Paxos] use our brand, but that's not something that we created."
The SEC has also targeted other crypto giants including Genesis, Gemini and Kraken for the offer and sale of so-called unregistered securities.
As a result, investors have been rushing to withdraw their cash from BUSD, causing the stablecoin to lose more than a third of its value, according to Nansen, cited by the FT.
Binance has also come under pressure recently, after a report showed the world's largest crypto exchange used customer deposits for its own undisclosed purposes, mirroring events that led to the downfall of FTX. Binance reportedly transferred $1.8 billion in stablecoin collateral to hedge funds which subsequently left its investors exposed.
- Juniper Hotels IPO allotment – How to check allotment, GMP, listing date and more
- Stocks dive at opening bell: Sensex-Nifty start trading day in red territory
- Investing in Renewable Energy Stocks
- Regulations enabled India to be global benchmark in fintech: Razorpay's Harshil Mathur
- India's poverty level has fallen below 5%: NITI Aayog CEO