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Binance USDC liquidity shortage summarized | Justin Sun actively allocates funds: I just deposited $100 million to Binance

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Binance USDC liquidity shortage summarized | Justin Sun actively allocates funds: I just deposited $100 million to Binance

On December 13th, the Binance exchange suspended withdrawals of USDC on certain blockchains such as Ethereum, BEP2, and TRON, sparking discussions among users. Binance founder Zhao Changpeng responded, "This is just a system maintenance announced a week ago." On the same day, TRON founder Justin Sun allocated funds early in the day and eventually injected $100 million worth of USDC into Binance, stating, "It is to facilitate the exchange's fund movements for normal business operations."

Binance Suspends Partial Blockchain Withdrawals of USDC, Reasons Beyond System Maintenance?

The Binance exchange has temporarily suspended USDC withdrawals on certain blockchains including Ethereum, BEP2, and TRON. Founder Zhao Changpeng CZ first stated that this was due to a system maintenance of the BNB Smart Chain BEP20 and BNB Beacon Chain BEP2 announced a week ago; however, the affected networks and timing in the announcement do not match the actual situation:

On 12/13, the actual situation with USDC was that BEP2 was suspended while BEP20 was normal, but the maintenance sequence in the announcement stated that BEP20 would be suspended. At the same time, USDC also suspended withdrawals on Ethereum and TRON, which were not mentioned in the announcement.

For other cryptocurrencies like FTM, withdrawals are normal on Ethereum, BEP2, and BEP20. Therefore, it does not align with the logic of network maintenance.

Justin Sun's Liquidity Assistance: Injects $100 Million into Binance

Lookonchain observed that Tron founder and Binance ally Justin Sun transferred $100 million USDC from Circle to the Binance treasury. Sun responded that this was to facilitate the exchange's fund movement for normal business operations.

Earlier in the day, Lookonchain observed an address suspected to be owned by Justin Sun withdrawing over 30 million BUSD and over 15 million USDT from Binance, sending over 30 million BUSD to Paxos's BUSD issuer treasury, then converting USDT to USDC before transferring it to Circle.

Wintermute Injects Nearly $150 Million USDC into Binance

Lookonchain also observed that on the 13th at noon, market maker Wintermute withdrew $153 million USDC from Coinbase and subsequently injected $149.85 million USDC into Binance. The last time Wintermute made such a significant move was 20 days ago.

Zhao Changpeng Responds: Banks Require Processing Time

In response to Justin Sun's USDC assistance, Binance founder CZ stated that the conversion of PAX and BUSD to USDC requires passing through a New York bank's USD account, hence relying on the bank's normal business hours. The current USDC situation will be resolved after this process.

They can be exchanged 1:1 without any leverage involved. Other cryptocurrencies like BUSD and USDT can also be withdrawn.

Zhao Changpeng responded to Justin Sun's remarks by stating that the BUSD on TRON is a cross-chain exchange, details of which are unclear and not under his purview.

BUSD and USDT Exchange Rate Discrepancy

Following the events, there has been a significant price discrepancy between USDT and BUSD, at one point dropping to 1:0.9989:

Nansen Data Shows: Binance Outflows Decrease in Past Seven Days

Nansen data indicates that Binance saw a net outflow of up to $1.6 billion in the past 24 hours, only accounting for ETH and ERC-20 tokens. While this amount is significant, Nansen states that compared to the initial $2.3 billion weekly outflow faced by Binance during the FTX collapse, the total outflow in the past seven days has decreased to $1.9 billion.