Binance CEO halts withdrawals of stablecoin USDC

Yahoo Finance's David Hollerith explains why Binance has temporarily halted USDC withdrawals.

Video transcript

RACHELLE AKUFFO: Binance now taking steps to get cash out of its exchange following concerns about its reserves, after a report that claimed its Bitcoin was over-collateralized. Yahoo Finance's David Hollerith has the latest. Hey, David.

DAVID HOLLERITH: Hey. So Binance's CEO Changpeng Zhao has stated over Twitter about a little more than an hour ago that the exchange has seen approximately $1.14 billion in net withdrawals. And that's significantly less than what we've seen earlier this morning, according to data reported by Nansen. So there has been a huge amount of withdrawals, particularly in stablecoins, from Binance over the last 24 hours.

And as you mentioned, the amount of customer funds coming out of Binance was large enough to temporarily halt redemptions for one stablecoin, which is called USDC. Now, importantly, over the summer, USDC was sort of phased out by Binance for its proprietary stablecoin. So that could be what this temporary halt looks like in USDC.

But we can't overlook the fact that there's been a huge amount of cryptocurrencies withdrawn from Binance in recent days. Two major market makers, Winter Mute and-- excuse me, Winter Mute and Jump Crypto have both redeemed up to about $435 million in total in the last week. And that's as of yesterday afternoon.

Binance has also seen a huge-- about a $547 million move from its Treasury wallet in the stablecoin Tether. And that could potentially be to shore up liquidity, given that these market makers are leaving-- still, not a good sign. And a Binance spokesperson would not offer further comments around this scenario.

But we all know that at this point, withdrawals are not good for a cryptocurrency, even if they are temporary, especially in light of what FTX did in November, which has looked to us since the bankruptcy filing as a misappropriation of customer assets. So that's, obviously, put Binance under fire right now. The bigger story of the day is the indictments that are rolling out around FTX's Sam Bankman-Fried. But we'll continue to watch this story as it unfolds.

And regardless, I think it is worth pointing out that Binance has attempted to push its transparency further in recent days. And those reports have still fallen short of SEC filings. And that's left a lot of investors asking for more and largely concerned.

AKIKO FUJITA: Yeah, David, some context on that $1.9 billion number-- Nanson and at least saying that this is the largest withdrawal they have seen from Binance since June of this year. So something to note here as we continue to follow that situation there. David Hollerith, as always, thanks so much for that.