Binance Stopped Withdrawals in USDC on December 11

In September, Binance announced that they were swapping all stablecoin holdings on their platforms to BUSD, the native stablecoin of the exchange. At the time, many experts took it as a power move to establish dominance over the market. All USDC and USDT accounts were tuned into BUSD.

While the CEX platform painted the move as a way to increase the safety of funds, some still thought that it was an attempt at taking over the market.

However, the rapid change in the landscape of the market and the sudden FTX collapse made the decision by Binance a bit more sinister.

The conspiracy is strong with this one

Many people know the role Changpeng Zhao played in the collapse of FTX. His infamous tweet was the final straw on the camel’s back and jumpstarted a series of events that destroyed FTX and made everyone in the crypto market panic.

The situation created a very interesting state of affairs where many centralized exchanges, intermediaries, and stablecoins were subjected to scrutiny. Binance immediately started its campaign to show that it is a well-managed platform where all funds are matched 1:1 with liquid assets.

At the same time, the exchange started pushing their stablecoin even harder, citing safety reasons. The same move was made by Coinbase, the issuer of USDC.

On December 11, Binance announced that they saw an increase in USDC withdrawals which could not be met on time. The explanation given was the fact that USDC withdrawals could be processed only via a swap involving money in bank accounts.

Banks did not work at the time, and the exchange could not satisfy some withdrawal requests. Indeed, they were paid out without any issues just a couple of hours later.

Is there something sinister going on?

Binance is in a peculiar predicament right now. However, the company can play its cards well and achieve great success in the long run. Right now, the biggest CEX platform in the world may secure the stablecoin market and drive out the competition.

The only thing it needs to do is survive for long enough to become the dominant force in the crypto market.

By Edward Richardson
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