Investors Withdraw $6 Billion From Binance Stablecoin

The “stablecoin” or stable cryptocurrency of BinanceBinance USD, had some $6 billion in outflows as a result of regulatory actions taken by the United States against the company issuing the token, according to CoinGecko.

Paxos Trust Company, which issues Binance USD, said on Feb. 13 that the United States Securities and Exchange Commission (SEC) told the company that it should have registered the product as a security and that it is considering taking action against the platform.

On the same day, New York’s main financial regulator (NYDFS) said in a consumer alert that it had ordered Paxos to stop creating the asset.

A NYDFS spokesperson later told Reuters via email that Paxos breached its obligations for “regular bespoke risk assessments” and checks of Binance and Binance USD clients necessary to prevent “bad actors from using the platform.”

Binance CEO Changpeng Zhao said the regulator’s decision meant the token’s market capitalization would decline over time.

On Wednesday, the value of all Binance USD was around $10.5 billion, down from $16.1 billion on February 13, according to market tracker CoinGecko.

The Financial Times reported on Wednesday that investors have withdrawn more than $6 billion from Binance’s token in the past month, citing data from blockchain analytics firm Nansen.

Analysts said the NYDFS move represented a setback in Binance’s efforts to gain market share from the largest stablecoins.