Binance reserves lost $2.3B following BUSD debacle

The SEC issued a notice to Binance USD issuer Paxos on Feb. 13 to stop further BUSD minting.

1 min read

Updated: February 17, 2023 at 5:51 pm

Cover art/illustration via CryptoSlate

Investors withdrew around $2.3 billion worth of Binance USD (BUSD) from Binance within four days after the Securities and Exchange Commission (SEC) issued a warning to BUSD issuer Paxos.

The SEC requested Paxos to stop further BUSD production on Feb. 13. At the time, Binance held a little over 14.4 billion BUSD tokens in its reserves. After the SEC intervention, the exchange’s BUSD pool rapidly started to shrink.

Binance reserves (Source: Glassnode)

Between Feb. 13 and Feb. 17, Binance’s BUSD holdings recorded a 16% decrease and fell to around 12.1 billion tokens.

The SEC vs. BUSD

After the SEC issued a Wells notice to Paxos on Feb. 13, Binance CEO Changpeng Zhao (CZ) responded to the SEC by saying that “Paxos will continue to service the product and manage redemptions.”

However, on the same day, Paxos announced that it would stop further BUSD minting starting from Feb. 21, 2023. In the meantime, the BNB token responded to this news by losing over 9% of its value.

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Author: Zeynep Geylan

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