Binance withdrawals surged to nearly $ 1 billion as investors seem alarmed by the recent Paxos crackdown. According to data from Dune Analytics, the net amount of single-day outflows reached $916 million – the highest number since November 2022, even though far below the last year's record of $2 billion withdrawn in May.
The situation is returning to normal, with DeFiLlama data showing a significant drop in outflows. Weekly numbers remain negative, but the platform saw over half a billion inflow last month.
Still, according to Nansen's data, users withdrew around $2.8 billion in crypto in the last 24 hours while depositing $2 billion in the same period. The withdrawals are clearly a result of the U.S. regulators' clampdown on Paxos soon after targeting Kraken and forcing it to shut down its crypto staking.
On February 13, SEC issued a notice to Paxos, recognizing Paxos Trust Company-issued dollar-pegged stablecoin Binance USD (BUSD) as unregistered security. A few hours later, the New York Department of Financial Services (NYDFS) ordered Paxos to cease the issuance of BUSD. On the same day, Paxos informed about ending the cooperation with Binance.
SEC's decision is controversial, to say the least. As Miles Deutscher soberly observed, considering BUSD unregistered security is ungrounded, based on the fact that, as a stablecoin, it doesn't pass the Howey Test.