Binance sees $1 billion in stablecoins flowing out, BUSD supply shrinks

Paxos, the company that issues Binance’s stablecoin, is currently being targeted by the US Security and Exchange Commission (SEC). Binance USD (BUSD) would be an unregistered security, according to the SEC. Paxos claimed on Monday that it completely disagreed with the allegations. However, the company will stop creating new BUSD, and now the supply of the stablecoin seems to be falling sharply.

275 million in BUSD destroyed

A study by Andrew Thurman of Nansen Analytics shows that a large amount of BUSD is sent to Paxos addresses. According to him, this means that a lot of BUSD will be burned. On Monday alone, there was $275 million to BUSD overturned.

The attack on Paxos and BUSD has also made other stablecoins nervous. USDC’s offering fell by $700 million. The stablecoin DAI also fell. Tether’s USDT seemed the least impressed by the developments and did not experience a significant drop in supply. Some find it remarkable that the SEC specifically attacks Paxos as opposed to Binance itself. Binance distributes returns for BUSD holders.

SEC opens attack on stablecoins

Paxos announced that USDP is unaffected by the SEC’s recent attack on the company. BUSD itself is therefore in a dire situation. Users are massively withdrawing their stablecoins from Binance, no less than $ 1 billion in stablecoins have already been withdrawn. This is 6 percent of the exchange’s total reserves. Certainly no small thing.

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The SEC’s attack on Paxos appears to be an attack on stablecoins in general. Stablecoins are crucial to the functioning of the entire crypto ecosystem. Tether’s largest stablecoin, USDT, has been the target of accusations in the past. Now BUSD seems to be Binance’s turn.

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