Binance temporarily suspends one of its services as demand explodes. Changpeng Zhao, the president of the exchange, intends to solve this problem and tries to reassure investors. However, setting up an operation to allow the company to deal with the threat could be contrary to a fundamental principle of crypto.
Binance pulls out all the stops to restart USDC withdrawals
The second largest stablecoin seems to be on the rise. After Coinbase proposed to exchange their USDT for USDC, the stable coin regained its full popularity. And now it's Binance's turn to bear the brunt of this growing notoriety. However, despite proof of its reserves last month, the crypto exchange is plagued by a lack of liquidity.
In a tweet , Changpeng Zhao, the company's CEO, announced that he was temporarily suspending USDC withdrawals. According to his statements, the suspension follows too many withdrawals. As a result, Binance would need to exchange some of its cash for the token in question. This measure will thus guarantee liquidity and allow users to withdraw the stablecoin at their leisure.
Although there are no cash flow problems, investors are still skeptical. Despite all the efforts that CZ puts into play to have a cash flow corresponding to the demand, investors cannot help but be wary. Indeed, despite the 1:1 conversions, the fact that the cryptocurrency exchange company does not have enough reserves in USDC attracts attention.
Additionally, swapping PAX/BUSD to USDC is subject to certain restrictions. According to another statement from Changpeng Zhao, the operation requires going through a bank in New York. Thus, it would be necessary to wait for the opening of the banks for the situation to return to normal.
The involvement of banks in crypto transactions divides the cryptosphere. Indeed, this process goes against one of the key principles of the ecosystem. Cryptos are meant to be self-contained. Although there is no cash flow problem with the giant, it has to deal with doubts and questions from its users.