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Binance temporarily suspends USDC withdrawals

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Re: Binance temporarily suspends USDC withdrawals

#21

Post by vgatherps »

xg15 wrote: post #8

If their PAX/BUSD -> USDC conversion only works during the opening hours of that New York bank, wouldn't this be well-known to everyone who tried to convert to USDC in the past? As in, what "situation" are they talking about? Going only from their tweet, there is nothing out of the ordinary happening at all...

In theory, this is related to their recent automated BUSD USDC conversion program. They started treating the two as fungible, and so have split reserves between the two (likely BUSD for the most part). If your reserves of USDC get drained faster than you can replenish, then you can't withdraw more USDC (even though it's backed since you have a BUSD waiting to convert).

Such a system runs along just fine, until suddenly there's huge USDC withdrawal pressure over the weekend, you can't get dollars from the bank BUSD uses to the bank USDC uses, and the USDC reserve goes empty. Wait for banks to get back into business and everything is super fine.

From the outside the above situation and a true insolvency look quite similar. It should be possible to inspect their BUSD balances on chain though?

Re: Binance temporarily suspends USDC withdrawals

#22

Post by vgatherps »

joyfylbanana wrote: post #16
madsbuch wrote: post #12

Earlier quoted context omitted.

They do, Both USDC and BUSD are backed by actual dollars. Ie. 1. Burn 1 BUSD 2. Withdraw that 1 dollar 3. Deposit it with the USDC account 4. Mint one USDC However, that requires that banks are open.

Probably not dollars, but some kind of low-risk assets like USD bonds? In that case you also can't just withdraw dollars, you have to sell the bonds - if they have to convert large amount like hundreds of millions, the spread on those bonds might get larger. Also even though it were just dollars in a regular bank account, when the amounts go large enough, the bank might have liquidity issues of their own. What would…

IIRC BUSD is whitelabeled from Paxos so it would probably be fine in the case of Binance troubles.

100MM isn't nothing, but it's very much moveable. Bond markets trade absolutely massive size. Even hen you could tell people "hey, you can't get your USDC, but we're trading out of positions over the next two weeks". Sucks but drastically different than an FTX situation.

Re: Binance temporarily suspends USDC withdrawals

#23

Post by andreareina »

xg15 wrote: post #11
mgaunard wrote: post #7

Earlier quoted context omitted.

BUSD is another stable coin pegged to USD, like USDT and USDC. What they're saying is that you can't withdraw USDC, but you can withdraw any of the other two.

The other two, which conveniently both have ties back to Binance. It feels a bit like saying "Unfortunately, converting Facebook Dollars to Apple Dollars is currently not possible due to minor technical difficulties. However, you can still easily convert to Oculus Dollars or Instagram Dollars..."

Where can I read more about how usdt has ties to binance? My search-fu is failing me.

Re: Binance temporarily suspends USDC withdrawals

#27

Post by projektfu »

Mistletoe wrote: post #25

The first crypto business that hires a PR person to take over all tweeting will rule the space. I can’t watch people destroy so much value solo tweeting anymore. The same goes for almost any business or celebrity I can think of.

OkEx/OkCoin are definitely fronted by PR.

Re: Binance temporarily suspends USDC withdrawals

#29

Post by voxelghost »

xuki wrote: post #3

> We expect the situation will be restored when the banks open. At least we'll know soon...

If they were telling the truth their should have been;

- USDC withdrawals will be restored when the banks open.

Expect, means in best case, they have no idea what the problem is, worst case it's all coming tumbling down

Re: Binance temporarily suspends USDC withdrawals

#30

Post by sho »

The quotes around "temporarily" are editorialising, IMO. They should be removed.

No fan of Binance but it's a reasonable explanation and submitter has given no reason to think it is not, indeed, a temporary situation, as has happened many times in the past without particular note.

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