Cryptocurrency exchange Binance has been hit by large outflows as traders move to take custody of their tokens amid concerns about its proof of reserve report. Binance CEO, Changpeng Zhao (CZ) remarked that the ‘stress test’ is a welcome challenge and FUD which stands for “fear, uncertainty, and doubt” will help them grow and keep the industry healthy.
Binance Resumed USDC Withdrawal Requests
Following the announcement of its pausing of withdrawals of the USDC stablecoin, Binance, the world’s largest cryptocurrency exchange, resumed withdrawals about several hours later. Binance has temporarily paused the withdrawal of USDC, as it carries out a token swap. To maintain sufficient reserves, the exchange has been making efforts to swap its BUSD holdings with the USDC stablecoin.
Changpeng Zhao, co-founder, and CEO of Binance stated that transfers into USDC from another stablecoin known as PAX or Binance’s native token BUSD cannot proceed unless they are routed through a New York-based bank, which was not yet open.
CZ said in a follow-up that these are 1:1 conversions with no margin or leverage involved. Binance will also try to establish more fluid swap channels in the future. He also mentioned that users can still withdraw other stablecoins, including BUSD and Tether (USDT).
Binance users have been withdrawing large amounts of funds from the exchange, including USDC and other stablecoins. Nansen, a blockchain intelligence platform, revealed that Binance has seen more than $2 billion in net outflows since Dec. 12 and it has been the highest daily withdrawals since June.
CZ: ‘Stress Test’ Is A Welcome Challenge
A Twitter user commends Binance for handling the withdrawals efficiently and CZ responded that it is a good idea to “stress test withdrawals” on each centralized exchange (CEX) on a rotating basis.
CZ said that they have experienced a wave of withdrawals before and experienced similar circumstances at present. Regardless of net withdrawals or net deposits on the exchange, it will be business as usual. Adding there are costs associated with running these tests, but it’s vital to keep the industry healthy.