Binance, the world’s largest cryptocurrency exchange, has halted withdrawals of the stablecoin USDC as contagion from the collapse of rival exchange FTX continues to spread across the cryptocurrency sector.
Investors are becoming increasingly worried about the stability of Binance following the $8 billion U.S. collapse of FTX in November, as well as a report of a possible criminal investigation into Binance by the U.S. government.
On social media, Binance said that it has “temporarily paused” USDC withdrawals while it undertakes a “token swap” that involves swapping one cryptocurrency for another without the need for fiat currency.
Changpeng Zhao, chief executive officer (CEO) of Binance, tweeted that the exchange is seeing an increase in withdrawals of USDC, a cryptocurrency known as a stablecoin because it is pegged to the U.S. dollar.
USDC is used by investors to trade in and out of different cryptocurrencies without the need to move money back into U.S. dollars. If investors are withdrawing USDC from Binance, it could be to move the stablecoin to another crypto platform.
Sam Bankman-Fried Arrested In The Bahamas
Separately, Sam Bankman-Fried, the former CEO of bankrupt cryptocurrency exchange FTX, has been arrested in the Bahamas as U.S. authorities file criminal charges against him.
Bankman-Fried, age 30, is being held in custody in the Bahamas where he lives while U.S. authorities expedite an extradition process to bring him back to America to face prosecution.
Federal prosecutors in the New York borough of Manhattan plan to outline their case against Bankman-Fried later today (December 13). Multiple media reports say that he will be charged with securities fraud and wire fraud.
The U.S. Securities and Exchange Commission (SEC) is also expected to file civil charges against Bankman-Fried for violating multiple securities laws.
Bankman-Fried has been under investigation since the November 11 bankruptcy of the crypto exchange. FTX collapsed while citing $8 billion U.S. in losses and more than one million creditors.
Even before it went bankrupt, federal prosecutors in Manhattan were investigating FTX as part of a broader probe into cryptocurrency exchanges. That investigation also appears to involve Binance.
Prosecutors in New York are expected to charge Bankman-Fried of intentionally misusing investor funds and essentially running a Ponzi scheme through FTX and Alameda Research, the bankrupt investment firm that was also run by Bankman-Fried.
