© Reuters
Investing.com – Market data revealed a scary move, as investors withdrew about 6 billion of the Binance USD stablecoin after a US regulatory crackdown on the world’s largest cryptocurrency exchange. This data came from cryptocurrency tracker Koenjico and was reported by Reuters.
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Paxos Trust, the issuer of the Binance stablecoin, said on February 13 that the US Securities and Exchange Commission (SEC) had told the company that it should have registered the product as a security and that it was considering taking action against the platform. On the same day, New York’s top financial regulator said in a consumer warning that it had ordered Paxos to stop creating the token.
Subsequently, a spokesperson for the New York State Department of Financial Services (NYDFS) told Reuters via email that Paxos had breached its commitments to “customized periodic risk assessments” and due diligence checks on Binance and Binance US clients needed to prevent “bad actors from using the platform.”
Binance exchange president Changpeng Zhao responded that the regulator’s decision means that the token’s market value will decrease over time.
The market cap of Binance USD has reached around $10.5 billion, down from $16.1 billion on February 13, according to market tracker CoinGecko.
The Financial Times reported Wednesday that investors have withdrawn more than $6 billion from the Binance-branded token in the past month, citing data from blockchain analytics firm Nansen.
Analysts said the move by the New York State Department of Financial Services (NYDFS) marks a setback in Binance’s efforts to gain market share from the larger stablecoins.
SEC chairman Gary Gensler has previously stated that he believes some digital currencies are securities.
