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Binance freezes withdrawals of stablecoin USDC as investors pull $2B
- drbig 4y agohttps://archive.ph/tb4rs https://archive.ph/tb4rs - "Binance halted USDC withdrawals after customers pulled over $2 billion worth of cryptocurrency from the exchange Monday, according to data from blockchain intelligence platform Nansen."
- ww520 4y agoAre people withdrawing the USDC coins or the USD behind the coins?
- jqpabc123 4y agoEither way, it's money leaving the exchange. This is what the "halt" is attempting to address if I read it correctly. The "dark side" of crypto is being made painfully obvious for all to see.
- 4pkjai 4y agoThe crypto coins. Binance is a Crypto to Crypto exchange. You can't deposit or withdraw USD from Binance.
- schemescape 4y agoAny idea why a New York bank is relevant then (per CZ)?
- stevehawk 4y agois it relevant? or is it a red herring.
- jqpabc123 4y agoProbably because the USDC is being held in a real bank account controlled by some unknown 3rd party who lives in some country without an extradition treaty. Gives you a warm, fuzzy, secure feeling that everything is perfectly safe doesn't it?
- twelve40 4y agohow can USDC be held in a real bank account? doesnt make sense
- flamemyst 4y agoThe backing of USDC held in real bank account. They need to move real USD to Circle bank to mint USDC.
- jqpabc123 4y agoNo, it doesn't --- unless they redeem them for USD. I doubt there is anything preventing Binance from doing whatever they want with the coins you place in their possession.
- tromp 4y agoThese Binance web-pages suggests otherwise: [1] https://www.binance.com/en/support/faq/how-to-buy-cryptos-with-usd-360036928272 https://www.binance.com/en/support/faq/how-to-buy-cryptos-wi... [2] https://www.binance.com/en/fiat/deposit https://www.binance.com/en/fiat/deposit
- 4pkjai 4y agoMy mistake!
- mypastself 4y agoI assumed people were moving USDC to other wallets (most likely other exchanges). But now that you mention it, I’m not so sure. Because one could signify mistrust in the token, the other in the exchange.
- 22c 4y agoThese seem to be the most relevant tweets: https://twitter.com/cz_binance/status/1602579499903852544 https://twitter.com/cz_binance/status/1602579499903852544 https://twitter.com/binance/status/1602708590271385600 https://twitter.com/binance/status/1602708590271385600 I'm not sure why USDC withdrawals were paused rather than trades on USDP/USDC and BUSD/USDC pairs temporarily disabled. I assume there were trade-offs or technical reasons why it was done this way.
- JumpCrisscross 4y ago> Binance Coin — a native token that is seen as reflecting customers' trust in the exchange — had slipped 5.12% to trade at just under $269 at last check Tuesday
- rngname22 4y agoThe most painful thing in my life is the fact I was sitting there thinking about putting 500-5000 usd into BNB at its token launch (for fractions of a penny), literally filling out KYC forms but ultimately felt it felt too risky to wire money overseas to a nascent Chinese crypto exchange. But then again, my risk aversion / caution in life has probably saved my life from car accidents or overdose so ehh whatever.
- NotYourLawyer 4y agoAnd you probably would have cashed out at a 10x multiple or whatever, so it’s not like you’d be a zillionaire today anyway.
- bink 4y agoAs someone who bought AAPL at $17/share before the ipod was released. This is correct.
- jqpabc123 4y agoevery digital dollar of USDC can always be exchanged 1:1 for cash. Well ... maybe not always ... and never without fees attached.
- Finnucane 4y agoI will glad pay you Tuesday for a binanceburger today.
- japoco 4y agoThis is not what is happening here, the USDC peg to the dollar has nothing to do with this. The problem is that Binance converts every stablecoin you deposit there to BUSD, and so if you want to withdraw say USDC or USDT even they’d have to convert them, which is apparently what they’re having trouble to do.
- jqpabc123 4y agothe USDC peg to the dollar has nothing to do with this. I never said it did. The problem is that Binance converts every stablecoin you deposit there to BUSD The real problem is that Binance can do whatever *they* want with your deposits --- including refuse to return them. The real problem is that the crypto market is about as far removed from *trustless* or *decentralized* as is imaginable or possible. The real problem is that people who say they don't trust government will readily trust FTX or BlockFi or Voyager or Celsius or Binance or Bitfinex --- all of which have been shown to be far less worthy of it in my opinion.
- bb88 4y agoUSDC is supposed to be the good stablecoin.
- modeless 4y agoMaybe that's why they can't print it out of thin air...
- birracerveza 4y agoIf you give me 100 USDC and I pinky promise to give them back but then I don't, whose fault is it? USDC's?
- oneoff786 4y agoReally it depends on why you didn’t / couldn’t.
- josefx 4y agoThey are one of the exchanges prominently listed by Circle as part of its ecosystem. Of course the fine print says that they don't endorse any of the companies they list, but what does it say about the ecosystem if they can't even list one trustworthy partner and instead list groups they explicitly don't trust themselves? Honest coin salesman: Look you want to trade honest coins? Down that alley is seedy Joe he is one of the local traders, on a good day there is only a 50% chance that he will mug you.
- yokem55 4y ago
- ldbooth 4y agoYikes. This could be the first inning of the Tether bubble deflating, and by extension half the crypto market.
- rapsey 4y agoJust like the last 10 times
- mjr00 4y agoHalf is optimistic. Tether destabilizing probably drops all crypto over 90%. Don't think it will happen, necessarily, but it's largely the only thing keeping crypto together at this point, price-wise.
- yladiz 4y agoDo you mean it's the only thing... tethering crypto together?
- paulpauper 4y agoWe will have to wait and see all the major stable coins still holding pegs
- hef19898 4y agoDidn't something similar happen in 2008 as well? When mortgage backed securities dropped but the opposite default swaps (?, I'd have to look it up), didn't move?
- JumpCrisscross 4y ago> the major stable coins still holding pegs How? In what assets? Even in Treasuries, tens of billions of unexpected sales in an off run will depress prices. If deposited in a podunk bank, it might literally go under.
- oneoff786 4y agoStill refers to the present. You are referring to a hypothetical future.
- neilv 4y agoWhenever there are runs on businesses in the "crypto" scam space, I wonder whether the withdrawals/cashouts that did/do get through are connected to whomever runs that business, before slamming the door on unconnected people.
- spookthesunset 4y agoOf course that is what happened. It’s crypto. It’s scams and exit scams all the way down. Always was always will be.
- deleted 4y ago[deleted]
- 4pkjai 4y agoThis might be why BTC is shooting up at the moment. If you can't withdraw your stable coins you might as well buy Bitcoin and withdraw that.
- jscottmiller 4y agoThis is exactly what happened at Mt Gox almost a decade ago.
- dbancajas 4y agoexcept those BTCs are not real. They are just pretend BTC in your account. You have to send it to your wallet
- latchkey 4y agoOr it could be on the news that SBF was arrested?
- JofArnold 4y agoMore likely it's reacting to inflation data.
- cableshaft 4y agoYeah, this is almost certainly what's going on. Lower inflation has juiced up its price in the past, same with stocks. Several of my stock holdings are up the same amount as Bitcoin is today.
- NotYourLawyer 4y agoMakes sense. It’s an iNfLatIon hEdGe.
- roflyear 4y agoNo, BTC is just fairly correlated with the US stock market.
- shadycuz 4y agoLooking forward to the Matt Levine break down in his daily news letter. Only way I can understand most of these finance things.
- RobLach 4y agoThe moment you halt withdrawals, the jig is up.
- hall0ween 4y agoI'm no crypto expert here, admittedly. Isn't the point of decentralization to avoid this level of control? It's like the crypto 'investor' response is "Decentralization...that's not so important. What we really want is sheer, unaltered speculation."
- quags 4y agoNothing prevents being decentralized and continuing that route but it requires more knowledge , it is harder , still has risk and crypto would not be as large with out the central players. Centralized and regulated crypto exchanges keeping the ability to have decentralized wallets is the best of both worlds. That is the way this is going barring making it illegal to hold your own wallet or sending decentralized payments which certainly isn’t an impossible scenario.
- WalterSear 4y agoThat's not the point. It's the beard.
- concinds 4y agoThe decentralised technologies are still groundbreaking and trustworthy. But you can’t market that, so it doesn’t get adopted. The lowest common denominator goes for the stuff that’s heavily advertised, like centralised exchanges (scams), stablecoins (scams), and leveraged retail investing (scam). If Tom Brady got paid to make an ad, surely that means the product is trustworthy?! You can’t fight human stupidity.
- kayamon 4y agoBitcoin has continued clearing transactions throughout, just as it always has since its creation. Crypto != Bitcoin.
- 4y ago
- Octokiddie 4y ago> The world's biggest crypto exchange will freeze all withdrawals of USD Coin while it conducts a "token swap" to boost its holdings of the dollar-pegged cryptocurrency, the crypto group's CEO Changpeng Zhao said Tuesday It's worth noting that USDC is not even a token controlled by Binance. It's controlled and issued by Circle. So effectively, Binance is refusing to honor its commitment to depositors to give them their money on demand. That's called a "default." Why? The article says something about a key bank being closed. Nonsense. Is the USDC held at that bank? No. Binance is allegedly holding it. Only clearly they're not because they can't produce it on demand. I'm frankly amazed that people with the ability to understand this alphabet soup mumbo jumbo keep falling for the same scam over and over again. Underneath all of the slick marketing and nerd posturing is a simple truth: these are all fractional reserve systems. Conceptually, they are no different than banks or pyramid schemes. The only possible reason you want a stable coin, rather than dollars, in the first place is because you're doing something that requires you to route around US financial regulation. The US dollar is digital. It moves around the world using a digital network. It's traded the world over by almost every country whether they want to or not. You can buy almost anything there is to buy with US dollars. You "need" a stable coin because you're trying to have your cake and eat it too: US dollar-like liquidity and value preservation without US dollar financial regulation.
- yashg 4y agoAlso pumping the price of a token without putting in actual money. When you can issue unlimited number of casino chips, you can sell an imaginary asset using as many chips as you want. Better still, get all casinos to accept each others chips to buy and sell those imaginary worthless tokens to lend credibility to chips and tokens.
- jaltekruse 4y agoI think there is an important missing part of this argument that many of the current paths to move dollars around that network in the traditional system take either days to settle and/or cost quite a lot in fees. I see crypto having potential to optimize lots of things and introduce extra trust from a technical infrastructure standpoint. Right now my traditional money is sitting in several digital banks or brokerages that I have no idea how well made they are underneath, I just see a website I can interact with. Crypto doesn't solve problems about where the coins meet the real world, even a stable coin with publicly auditable holdings to back it can have secret debt leveraged against those assets. Those problems seem only possible to resolve with regulation as it has been with the traditional financial system, but standardizing protocols to move money around and reducing lead time and/or fees as crypto evolves could really help the financial system be more flexible. With everyone carrying around a smartphone it really should make us question why so much money needs to move through the major credit card networks, we don't need their special hardware anymore.
- tnel77 4y ago“Crypto sucks. This is proof.” Exchanges going under proves that people are greedy and/or stupid, but it doesn’t inherently mean every crypto project is bad. It doesn’t seem like people holding their own keys are having a bad time right now. Sure, prices of these assets are down, but a hardware wallet is an easy way to make sure your assets don’t end up being given away during a bankruptcy proceeding.
- JumpCrisscross 4y ago> doesn’t inherently mean every crypto project is bad No, but it’s lost the benefit of doubt. Starting from the position that crypto is likely fraud, and those participating in it are facilitating (wittingly or not) money laundering, is spreading from financial peripheries to money centre economies.
- jbverschoor 4y agoYou mean the benefit of the greed
- echelon 4y agoAfter all of this fallout, the only people left that will even touch crypto will be the ones that understand how to set up and use a hardware wallet. I don't think that will be a very large market.
- tnel77 4y agoPerhaps. I’m guessing that the sting will wear off and newcomers will venture into crypto sometime in the future. I personally view these crashes as a necessary cleansing since so many scam/meme projects get created every go around.
- echelon 4y agoThat's true. But there's a lot of opportunity cost and risk in staying the course, especially if you're a crypto developer or deeply invested. Governments are modernizing trade and settlement systems. Other areas of tech are booming, and one could conceivably still get in at the ground floor. And who knows, we may have yet to even see the bottom of where crypto will drop. If I were in crypto, I'd be looking at AI/ML with hungry eyes.
- Imnimo 4y agoOut of curiosity, did Binance's recent faux-audit cover USDC reserves?
- Macha 4y agoBoom.
- latchkey 4y agoI'm not defending Binance in any way, but this is FUD that is getting blown out of the water (arguably, people are on edge these days). It was pre-announced downtime for a hardfork on their BSC chain. https://twitter.com/cz_binance/status/1602510004795367424 https://twitter.com/cz_binance/status/1602510004795367424 It has caused a bit of a bank run and cz says things are processing just fine (along with tons of 3rd party confirmations). https://twitter.com/cz_binance/status/1602676998094069760 https://twitter.com/cz_binance/status/1602676998094069760 I know HN wants to see crypto die in a giant ball of flaming fire, but let's not lower ourselves to the point of just passing on FUD. Edit: -4 incoming. I'm going to leave this here because it is worth it. I'm not a fan of FUD and neither should you be.
- Sebguer 4y ago"A bit of a bank run" is like saying "a small nuclear bomb".
- salawat 4y agoInteresting that a bank run, (non-banks restoring theor fiscal custody of their own money, leaving the banking empty) is considered analogous to a weapon of mass destruction. What's so taboo about everyone having their own money in hand?
- eschulz 4y agoYou can't get a little bit pregnant
- latchkey 4y agoLast time I checked, I can't get pregnant, at all.
- treis 4y agoThis is a terrible low effort post. Anyone holding a large amount of crypto should have the majority of it in a cold wallet. It should take a significant amount of time to make that transfer because it should involve significant controls like multiple people travelling to a secure site. An honest crypto exchange might see a "bit of a bank run" without raising any significant alarm.
- dwighttk 4y agoHow’s Coinbase holding up?
- latchkey 4y agoLooks at the status page, seems green. https://status.coinbase.com/ https://status.coinbase.com/
- mannykannot 4y agoIf you issue a "proof of reserve report" that looks like you are trying to hide something, don't be surprised if people conclude exactly that.
- pyb 4y agoIf they need to "boost their holdings" in USDC in order for their customers to withdraw these coins, what had they been doing with their customer's deposits ?
- guessbest 4y agoFunny, it is an "exchange" that takes a deposit, but doesn't actually purchase the promised cryto holding until a withdraw is made.
- rosnd 4y agoBinance delisted USDC in september, since then the only way to "purchase" USDC on Binance has been by requesting and USD withdrawal via USDC.
- JaggerFoo 4y agoWow, a lot of histrionics in the comments. Like a wise man once said: "First principles, Clarice: simplicity. Read Marcus Aurelius, Of each particular thing, ask: What is it in itself? What is its nature?" The article is dealing with a foreign unregulated crypto-exchange and a US regulated stable coin.
- helloworld11 4y agoLove the Lecter reference...
- tomkaos 4y agoFunny that in the cryptoworld transaction is block because : "The banks are not open for another few hours"
- alangibson 4y agoWhy hasn't anyone created a Non Fungible Stablecoin? Mint NFTs that are pictures of 100 USD notes you have in a safe deposit box. Sell them for 100 USD. Make money by charging for redemptions of the specific notes you own via NFT.
- aaroninsf 4y agoI suppose that tiny amount of gifted top-shelf crypto I have parked, underwater, in Coinbase for the last N years is going to just evaporate, isn't it.
- crypt1d 4y agoUSDC withdrawals have been enabled again, but I don't suppose that's HN front-page worthy as much as the panic inducing titles. https://twitter.com/binance/status/1602708590271385600?s=20&t=zUTyKJdINJjSAAy9UpnImw https://twitter.com/binance/status/1602708590271385600?s=20&...
- plugger 4y agoYes, suprisingly people seem to react negatively to being frozen out of withdrawing their cash and those events are newsworthy?
- crypt1d 4y agoIts a pretty big leap from "you cannot withdraw this particular stablecoin at the moment, use another one" to "you cannot withdraw your cash". Devil is in the details.
- plugger 4y agoIsn't the stablecoin considered a financial instrument? The devil may be in the details, but the high level facts remain. People could not access financial instruments that they own, and that could be considered newsworthy.
- 9935c101ab17a66 4y ago? Withdrawals working isn’t newsworthy — that should always be the case. But when a “financial institution” in a notoriously unstable market segment prevents users from withdrawing their own funds, then of course its going to be a big story (as it should be!).
- q1w2 4y agoWithdrawals RESUMING after stopping is just as newsworthy.
- dorkwood 4y agoWhat about all the planes that made it to their destination? Why doesn't the news report that?
- aftbit 4y agoA few thoughts from someone who has been around crypto for years: 1. Do not trust any centralized exchange. Hold your own tokens using a secure hardware wallet. Back up your seed phrase securely. This is not really that hard anymore IMO. 2. Let me repeat that, but more emphatically... Centralized exchanges are not to be trusted. They are not "crypto". They are unregulated banks operated by shady characters. Use them as on- and off-ramps from fiat, but get your tokens into a cold wallet ASAP. If you leave your money in them, they _will_ rug-pull you at some point. 3. Crypto token prices are primarily driven by speculation. Do not expect stability. Do not expect a token's price to appreciate just because the project is technically interesting, or solving a real need. Instead, expect prices to fluctuate wildly, mostly in correlation to the same macroeconomic events that impact stocks, with an even higher risk. 4. Not all stablecoins are created equally. Run away from algorithmic stablecoins IMO. Also avoid USDT and any other coins where proof of reserves seem suspicious. I personally prefer USDC. If you _must_ invest in an algo coin, look at DAI, but keep in mind that it is very exposed to USDC as well. 5. USD-pegged stablecoins can all be blacklisted and paused. If they want to do business in dollars, their makers have to accept some degree of US.gov regulation. Do not expect to hold and spend your USDC if the US government wants to stop you. 6. Do your own research, damnit. This is still early days for DeFi and digital assets, and scams are thick on the ground. Do not trust what random internet commentators say, and keep your wits about you. 7. Don't lose hope. While 95% of the economic activity in the space is either scams, fraud, or speculation, the remaining 5% consists of people trying to solve real problems that are not adequately addressed by offline cash and existing payment networks. I know HN loves to point out that crypto is a solution looking for a problem, but the truth is that the current system is not perfect, and crypto brings some much needed transparency and decentralization to the world. Crypto winter is in some ways good for this, as it will disproportionately drive away the scammers and "number go up" crowd, while the real teams will keep building. Edit, for some specifics of my stack: I use a Ledger Nano X hardware wallet, with Ledger Live for management, Electrum (for Bitcoin), Keplr (for Cosmos ecosystem), and MetaMask (for Ethereum and other Solidity networks). I have a separate Chrome profile that has the latter two extensions installed, and only use it for DeFi crypto things. The only CeFi exchange I use is Coinbase, and I keep my balance there near $0 unless I anticipate a trade within the next 30 days. None of this is financial advice; I'm just a dude on the internet.
- DebtDeflation 4y agoFun Fact - Binance is technically not headquartered in any country in the world. Originally they were based out of China, then when China banned crypto trading they moved to Japan for around a year, then got in trouble with the regulators there, left, and were trying to strike a deal with the Malta government to incorporate there, but it fell through. CZ has been saying for over a year that they will announce their new HQ location soon, but never has. They have registered subsidiaries in a few countries but at the corporate holding company level their HQ is essentially whatever hotel CZ and his laptop happen to be staying at this week.
- staticautomatic 4y agoThat's all fine until the lawsuits start and a judge or arbitrator decides for them where their principal place of business is if they don't choose one.
- AustinDev 4y agoLucky me, I just sold all my USDC yesterday. Back into old dollars for me for the time being.
- Animats 4y agoIt's 1220 PST. Are withdrawals still frozen?
- Animats 4y agoCoindesk says that USDC withdrawals have resumed.
- mikl 4y agoA bit ironic that they call them “stablecoins” when they keep falling over.
- sam_goody 4y agoUSDN is unpegged and below $0.70 [1] I don't believe they have a chance of recovery. USDD dipped under $0.97 (the "official peg") both yesterday and today [2]. The reserves are being poured in to keep it propped up till confidence returns. Hmmmmm... UST (Luna/Terra) is, as is well known, finally stable ;) In the famous thread that brought down FTX, CZ accused SBF of trying to crash Tether with a paltry $250M. While I don't see how that could be, CZ knows much more than me about what is really propping up Tether, and that is a scary thought. And now Circle is under pressure. OK, they are big, and somewhat audited, so they probably can hold up unless a LOT of customers wanted out. Of course, if any of these exchanges or stablecoins were honest, they would have 100% of customer's funds available or close to available, and a run wouldn't be a risk. But, let's not kid ourselves - No one in this space is honest. I can totally imagine a crash of USDN leading to a run and crash of USDD, than a bigger run on Binance and Tether. I wonder which of those two has a larger hole? I also wonder whether a crash of a $20bn fund could cause less scrutiny on SBF? And what would happen to BTC without Tether's magical beans to prop it up? [1]: https://coinmarketcap.com/currencies/neutrino-usd/ https://coinmarketcap.com/currencies/neutrino-usd/ [2]: https://coinmarketcap.com/currencies/usdd/ https://coinmarketcap.com/currencies/usdd/
- pabber 4y agoI know where the $ to cover those withdrawals came from,. Check out the timing And the large transactions This wallet belongs to Bitfinex This is bad , looks like Binance needed a bailout to cover withdrawals https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7?a=0x5754284f345afc66a98fbb0a0afe71e0f007b949 https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c...
- pabber 4y agoI know where the bailout to cover those withdrawals came from