Cryptocurrency exchange Binance has seen a surge of withdrawals over the last 24 hours as investors appear to be spooked over recent news of regulatory action against Paxos and its stablecoin Binance USD.
At the same time, the BUSD token has recorded significant redemptions, with 342 million BUSD burned over the last 24 hours according to Peckshield.
On Feb. 12, news broke that the United States Securities and Exchange Commission gave notice of potential enforcement action against Paxos. It alleged the stablecoin is an unregistered security, an assertion that Paxos denies.
Data compiled from the blockchain intelligence platform Nansen show that Binance recorded 24-hour multichain token net outflows of $788.5 million, caused by outflows of $2.7 billion exceeding inflows of around $1.97 billion.
According to Dune analytics data, it’s the largest 24-hour net outflow since Dec. 17, when Binance’s proof-of-reserve audits were removed from auditor Mazars’ website.
A spokesperson for Binance told Cointelegraph that “funds are SAFU” — backed by a Secure Asset Fund for Users — echoing what Binance chief Changpeng “CZ” Zhao said earlier on Feb. 13.
The spokesperson added that the exchange recently had a sell-off with “more than $1 billion” withdrawn in a 12-hour period, which it claims “was managed with ease.”
“We run a very simple business model — hold assets in custody and generate revenue from transaction fees,” Binance said, adding:
“We take our responsibility as a custodian seriously and maintain 1:1 backing for every user asset.”
Following the SEC’s action and a reported tip-off from USD Coin issuer Circle, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the issuance of BUSD on Feb. 13.
The outflows and token burns seemingly are a response to those events, with crypto users cashing out of the stablecoin over fears of further regulatory action.
Binance’s reserves harbor the largest amount of BUSD, holding $14.4 billion worth of the stablecoin, or around 90% of the $16.1 billion current market cap.
The crypto exchange also has around $60 billion worth of reserves, with 22% of that made up of BUSD.
A New York judge has granted a request from prosecutors to defer civil proceedings against Sam Bankman-Fried from the Commodities Futures Trading Commission and the Securities Exchange Commission until after the FTX founder’s criminal trial in October.
U.S. District Judge of Manhattan Kevin Castel on Feb. 13 granted the motions to stay the civil proceedings “without prejudice,” meaning the cases will now be halted until after the Department of Justice's criminal trial concludes.
The motion was first submitted on Feb. 7 by Damian Williams, the U.S. Attorney for the Southern District of New York, requesting to defer both civil cases against the FTX founder and former CEO.
both civil cases (one from the SEC and one from the CFTC) have been stayed until the conclusion of the criminal trial against Sam Bankman-Fried — Molly White (@molly0xFFF) February 14, 2023
Citing his reasons for wanting the delay, Williams emphasized that all three cases will most likely be hinged on providing the same evidence against Bankman-Fried, and that the DOJ’s trial in October will have a “significant impact” on these civil cases.
He also suggested that failing to delay the cases may give SBF unfair advantages in the DOJ’s trial, as the FTX founder had the tools to “improperly obtain impeachment material regarding the government’s witnesses, circumvent the criminal discovery rules, and improperly tailor his defense in the criminal case.”
Bankman-Fried’s legal team did not oppose William’s motion to defer the proceedings.
In a related court development concerning SBF’s alleged witness tampering antics, Judge Lewis Kaplan of the United States District Court for the Southern District of New York on Feb. 9 extended the FTX founder’s ban on using all encrypted messaging apps until Feb. 21, as part of his bail conditions.
A week prior, SBF’s legal team had negotiated a deal to use certain encrypted apps under strict supervision, however, Judge Kaplan overruled it and suggested that he was more concerned about shutting down any encrypted communication than offering SBF a small convenience.
Singapore state-owned megabank DBS Group is planning to expand its cryptocurrency services to Hong Kong as the Chinese territory pushes to become a digital asset hub.
DBS Bank plans to apply for a license to allow it to offer crypto trading services to Hong Kong customers, Bloomberg reported on Feb. 13.
“We are planning to apply for a license in Hong Kong so that the bank could sell digital assets to our Hong Kong customers,” DBS Bank Hong Kong CEO Sebastian Paredes said.
Paredes noted that DBS welcomes new crypto-related policies in Hong Kong and is also “very sensitive” to the risks associated with digital assets. The bank is willing to become one of the first lenders offering crypto in Hong Kong once the regulations are fully clear and DBS “understands exactly the framework,” he added.
DBS Bank made a massive move into the cryptocurrency industry a few years ago, launching its institutional crypto exchange in Singapore in late 2020. The company has also been working to expand its crypto platform to retail investors and applying decentralized finance technology to joint projects with Singapore’s central bank.
The news comes amid DBS announcing that its net profit rose 20% to a record 8.19 billion Singaporean dollars (SGD), or $6.7 billion, in 2022. Total income increased 16% to 16.5 billion SGD ($12.4 billion), crossing 16 billion SGD for the first time in history.
DBS Bank’s plans to expand to Hong Kong come amid China’s special administrative region continuing to reaffirm its pro-crypto stance. In January, Hong Kong’s financial secretary, Paul Chan, declared that the Hong Kong government is open to collaboration with crypto and fintech startups in 2023. The official also said that a lot of industry firms expressed willingness to expand operations in Hong Kong or to go public on local exchanges.
As previously reported, Hong Kong lawmakers passed legislation to set up a licensing system for virtual asset service providers in December 2022. The new regulatory framework is designed to provide the same degree of market recognition to crypto exchanges as the one that is currently applicable to traditional financial institutions.
While Hong Kong authorities have been opening up to crypto recently, Singapore has taken a more stringent approach to the crypto industry in the aftermath of major industry failures in 2022. In October, the Monetary Authority of Singapore proposed to ban all forms of cryptocurrency credit following the bankruptcy of the Singaporean crypto hedge fund Three Arrows Capital.
This Daily Dose was brought to you by Cointelegraph.