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I honestly expected more from the HN crowd. The comments here are disturbingly inaccurate and fear mongering. For those of you that don't want to sift through t

I honestly expected more from the HN crowd. The comments here are disturbingly inaccurate and fear mongering. For those of you that don't want to sift through the BS and just get the gist (from someone deep in this space): - Binance suspended USDC withdrawals. You can still withdraw in other stablecoins, fiat, or crypto. You can withdraw BUSD and swap to USDC on another exchange (dex). So really, this is not a big deal. - The reason why this happened is - a while ago, Binance started automatically converting user USDC to BUSD upon deposits. Since then, we've then seen large amounts of USDC being sent to Circle from Binance, supposedly for redemption purposes. - This now (likely) means that Binance has a lot of cash on hand, but not enough USDC to process the current withdrawal frenzy. So they have to go to their redemption bridge and convert their cash back to USDC. As such, the explanation given by CZ is very plausible. - Withdrawal suspensions are not an uncommon occurrence on Binance, or any other exchange for that matter. You are only noticing this now because the market participants suffer from PTSD from other exchanges going under and the effect of the news is amplified. - The fear seems to be largely coming from people associating the withdrawal suspension with the recent FTX fiasco. However, and especially without understanding the context of those suspensions, its important to remember - correlation does not mean causation. - It also comes from people expecting Binance to have USDC at 1:1 ratio liquid, but thats not the case due to the auto conversion mentioned, and explained, by Binance. - Its also worth noting that BUSD is not a Binance product. Its managed by Paxos, which is a separate entity. Ultimately, the r/r here is clear: it takes little effort to withdraw and stay safe, but the downside is huge if Binance goes under. So its natural for people to decide to withdraw even when chances of it blowing up are slim. Withdraw your coins if you are worried, preferably via fiat to a bank. But, please, don't go around spreading panic about things you don't understand or lack the context to judge.

janmo 4y ago
FTX a few days before going belly up: "Stablecoins: processing. Banks are closed for the weekend, though; USD <> stablecoin creations/redemptions might be slower until wires clear tomorrow, especially for some coins/chains." https://twitter.com/FTX_Official/status/1589510763328450561 https://twitter.com/FTX_Official/status/1589510763328450561 I also I would like to add that: - USDC on Binance is not 1:1 backed by USDC, but by another stable coin such as BUSD or perhaps even USDT. Both of them are much harder to convert into real dollars! - Binance is obviously not prepared for a bank run, this is happening on a Monday/Tuesday, not even a weekend, and the withdrawals issued started yesterday while the banks where open! As of this post, USDC withdrawals have been suspended for at least 14 hours! Source: https://twitter.com/Cryptolicious9/status/1602411551751024640 https://twitter.com/Cryptolicious9/status/160241155175102464...
- crypt1d 4y ago
  > - USDC on Binance is not 1:1 backed by USDC, but by another stable coin such as BUSD or perhaps even USDT. Both of them are much harder to convert into real dollars! This is not true in any way. First, you do not hold USDC on Binance, you hold BUSD. Your USDC deposits are automatically converted to BUSD. Neither USDT nor BUSD is "hard" to convert to real dollars. Swap them to USDC on Uniswap and do whatever you please with them. > - Binance is obviously not prepared for a bank run, this is happening on a Monday/Tuesday, not even a weekend, and the withdrawals issued started yesterday while the banks where open! As of this post, USDC withdrawals have been suspended for at least 14 hours! As I said, you can withdraw in other stablecoins. If you go to a bank, and you cannot withdraw USD at that moment, but you can withdraw EUR - does that mean the bank is insolvent?
  - yladiz 4y ago
    > If you go to a bank, and you cannot withdraw USD at that moment, but you can withdraw EUR - does that mean the bank is insolvent? What kind of bank would this happen at? A bank in the EU where you're trying to withdraw USD?
    - gizzlon 4y ago
      If you put in USD and EUR had turned worthless..
  - gizzlon 4y ago
    > Your USDC deposits are automatically converted to BUSD Guess this is not new, but it seems like an obviously horrible idea!! The minute people lose confidence, the value of BUSD go do down and people will withdraw in not-BUSD. Meaning they will have to make more BUSD to cover the difference, devaluing the BUSD more, causing a spiral. What am I missing here? Hmm..
    - crypt1d 4y ago
      Not sure I follow. Why would they mint BUSD if people are withdrawing other coins? BUSD is just USD denominated in tokens on chain, each token represents 1 usd at their bank so they cannot (or rather, should not) mint more than they have in custody.
nailer 4y ago
The point is that custody services should hold coins 1:1. Binance should already have the USDC on hand. They do not, because they swapped the currency their customers were holding. Saying BUSD is the same as USDC is akin to saying UST is the same as USDC. They are not the same, they are backed by different entities with different behaviour and different reputations.
- crypt1d 4y ago
  They are not a custody service, they are an exchange. They are not obliged to hold USDC, if all customers have their assets in BUSD due to the conversions that happened. Are you expecting Binance to have 1:1 BUSD on hand, in addition to holding the same amount in USDC as well (so 2x the amount of funds deposited by the customers)? Nobody said BUSD == USDC. But comparing it to UST (an algorithmic stablecoin nonetheless) is, at best, misleading.
  - nailer 4y ago
    > They are not a custody service, they are an exchange. Interesting. Because a lot of people think they're a custody service and use Binance as such. > They are not obliged to hold USDC, if all customers have their assets in BUSD due to the conversions that happened. What? Someone trusted Binance to store USDC. The conversions should not have happened. > Are you expecting Binance to have 1:1 BUSD on hand, in addition to holding the same amount in USDC as well No. Nobody is expecting that. You're the only person that mentioned it.
    - crypt1d 4y ago
      > Interesting. Because a lot of people think they're an exchange and use BInance as such. ...that's what I said? > What? Someone trusted Binance to store USDC. The conversions should not have happened. Conversions were announced timely. See https://www.binance.com/en/support/faq/what-is-busd-auto-conversion-and-how-to-deposit-and-withdraw-usd-stablecoins-on-binance-7a2571c63d97459ab4e44a8dd01cf7e8 https://www.binance.com/en/support/faq/what-is-busd-auto-con... > No. Nobody is expecting that. You're the only person that mentioned it. Its the logical conclusion of people expecting Binance to hold full USDC deposit amounts, even when most/all USDC was converted to BUSD.
largepeepee 4y ago
There seems to be a stable coin war going on with USDC leading the charge. Has been happening for a few weeks now starting from a tweet from Brian. Going be interesting to see if they actually manage to depeg tether.

janmo 4y ago

FTX a few days before going belly up: "Stablecoins: processing. Banks are closed for the weekend, though; USD <> stablecoin creations/redemptions might be slower until wires clear tomorrow, especially for some coins/chains." https://twitter.com/FTX_Official/status/1589510763328450561 https://twitter.com/FTX_Official/status/1589510763328450561 I also I would like to add that: - USDC on Binance is not 1:1 backed by USDC, but by another stable coin such as BUSD or perhaps even USDT. Both of them are much harder to convert into real dollars! - Binance is obviously not prepared for a bank run, this is happening on a Monday/Tuesday, not even a weekend, and the withdrawals issued started yesterday while the banks where open! As of this post, USDC withdrawals have been suspended for at least 14 hours! Source: https://twitter.com/Cryptolicious9/status/1602411551751024640 https://twitter.com/Cryptolicious9/status/160241155175102464...

crypt1d 4y ago
> - USDC on Binance is not 1:1 backed by USDC, but by another stable coin such as BUSD or perhaps even USDT. Both of them are much harder to convert into real dollars! This is not true in any way. First, you do not hold USDC on Binance, you hold BUSD. Your USDC deposits are automatically converted to BUSD. Neither USDT nor BUSD is "hard" to convert to real dollars. Swap them to USDC on Uniswap and do whatever you please with them. > - Binance is obviously not prepared for a bank run, this is happening on a Monday/Tuesday, not even a weekend, and the withdrawals issued started yesterday while the banks where open! As of this post, USDC withdrawals have been suspended for at least 14 hours! As I said, you can withdraw in other stablecoins. If you go to a bank, and you cannot withdraw USD at that moment, but you can withdraw EUR - does that mean the bank is insolvent?
- yladiz 4y ago
  > If you go to a bank, and you cannot withdraw USD at that moment, but you can withdraw EUR - does that mean the bank is insolvent? What kind of bank would this happen at? A bank in the EU where you're trying to withdraw USD?
  - gizzlon 4y ago
    If you put in USD and EUR had turned worthless..
- gizzlon 4y ago
  > Your USDC deposits are automatically converted to BUSD Guess this is not new, but it seems like an obviously horrible idea!! The minute people lose confidence, the value of BUSD go do down and people will withdraw in not-BUSD. Meaning they will have to make more BUSD to cover the difference, devaluing the BUSD more, causing a spiral. What am I missing here? Hmm..
  - crypt1d 4y ago
    Not sure I follow. Why would they mint BUSD if people are withdrawing other coins? BUSD is just USD denominated in tokens on chain, each token represents 1 usd at their bank so they cannot (or rather, should not) mint more than they have in custody.

nailer 4y ago

The point is that custody services should hold coins 1:1. Binance should already have the USDC on hand. They do not, because they swapped the currency their customers were holding. Saying BUSD is the same as USDC is akin to saying UST is the same as USDC. They are not the same, they are backed by different entities with different behaviour and different reputations.

crypt1d 4y ago
They are not a custody service, they are an exchange. They are not obliged to hold USDC, if all customers have their assets in BUSD due to the conversions that happened. Are you expecting Binance to have 1:1 BUSD on hand, in addition to holding the same amount in USDC as well (so 2x the amount of funds deposited by the customers)? Nobody said BUSD == USDC. But comparing it to UST (an algorithmic stablecoin nonetheless) is, at best, misleading.
- nailer 4y ago
  > They are not a custody service, they are an exchange. Interesting. Because a lot of people think they're a custody service and use Binance as such. > They are not obliged to hold USDC, if all customers have their assets in BUSD due to the conversions that happened. What? Someone trusted Binance to store USDC. The conversions should not have happened. > Are you expecting Binance to have 1:1 BUSD on hand, in addition to holding the same amount in USDC as well No. Nobody is expecting that. You're the only person that mentioned it.
  - crypt1d 4y ago
    > Interesting. Because a lot of people think they're an exchange and use BInance as such. ...that's what I said? > What? Someone trusted Binance to store USDC. The conversions should not have happened. Conversions were announced timely. See https://www.binance.com/en/support/faq/what-is-busd-auto-conversion-and-how-to-deposit-and-withdraw-usd-stablecoins-on-binance-7a2571c63d97459ab4e44a8dd01cf7e8 https://www.binance.com/en/support/faq/what-is-busd-auto-con... > No. Nobody is expecting that. You're the only person that mentioned it. Its the logical conclusion of people expecting Binance to hold full USDC deposit amounts, even when most/all USDC was converted to BUSD.

largepeepee 4y ago

There seems to be a stable coin war going on with USDC leading the charge. Has been happening for a few weeks now starting from a tweet from Brian. Going be interesting to see if they actually manage to depeg tether.