Binance, the largest cryptocurrency exchange by trading volume, announced on Tuesday that it was embarking on a momentary suspension of withdrawals of stablecoin USDC to carry out a “token swap.”
Unlike the FTX saga, which compounded the losses of many crypto investors while they quietly and slowly recovered from the year’s bearish muddle, Binance users have processed significant withdrawals so as not to be victims of mismanaged funds.
Binance’s chief executive tweeted, “On USDC, we have seen an increase in withdrawals.” Binance’s USDC withdrawal uptick is influenced by the market’s recent ugly news of sudden bankruptcy. The USDC enjoys prominence because it is equal to the U.S. dollar.
Trading USDC Coin with two different crypto tokens—Paxos Standard and Binance USD—needs the use of traditional currency (the dollar) at a bank in New York. Zhao added. “The banks are not open for another few hours. We expect the situation will be restored when the banks open.
Binance is conducting a token swap to ensure that users can trade tokens without using traditional currency.
Information about Binance’s increased withdrawal of USDC
Though Binance’s announcement played a significant role in the uptick in the withdrawal of USDC, Justin Sun provoked more influence than the announcement. According to a report, Justin Sun allegedly withdrew a staggering sum of $50 million from Binance, prompting many crypto investors to speculate on Binance’s functionality in light of the disaster that had plagued FTX users who trusted SBF to find a way to ensure their funds were secure and safe.
However, he clarified the speculation when he tweeted a link to Etherscan that showed he had sent $100 million USDC back into the Binance cryptocurrency exchange. By doing that, he was trying to subdue the anxiety rapidly enshrouding the minds of Binance customers.
According to the report by on-chain data, nearly $1.8 billion in withdrawals have been made in the last 24 hours. Nansen data reported that Paxos and Huobi acquired a part of this inflow, with a Netflow of roughly $162 million between the two exchanges.
A vital lesson for other crypto exchanges
Investors are presently filled with doubts and wild suspicions. Thus, crypto exchanges must not underestimate the importance of effectively communicating any update or transition to customers as and when it is due to avoid losing customers.
Understandably, investors have let go of their patience and loyalty. The year has been a bumpy ride for cryptocurrency at large, and there have been corroborating woes that have doubled, tripled, and compounded investors’ pain. Until the market returns to its previous condition, crypto exchanges must tread carefully because a mistake could drag the firm into a puddle of losses and retrogression.
Binance is one of the biggest cryptocurrency exchanges in the world, and regardless of this market’s gloomy spell, customers should at least trust them because of their pedigree—a legacy that only a few crypto exchanges can compete with.
Instead, customers became weary after a sudden suspension of withdrawals, which signals that many crypto traders are yet to recover from the PTSD of the FTX crash. Traders are on high alert, constantly monitoring the movements of a crypto exchange to avoid being left in shambles.
Customers will not act out the pulse of anxiety if crypto exchanges release official statements on their websites revealing the pending update, reasons why it is happening, and how long it will last.
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