Binance Swaps BUSD Stablecoin From ‘Recovery Fund’ to Bitcoin … – Decrypt
Binance, the worlds largest crypto exchange by trading volume, responded to the latest drama around the USDC stablecoin by converting the remainder of its $1 billion Industry Recovery Initiative funds into Bitcoin (BTC), Ethereum (ETH), and other digital currencies.
Given the changes in stablecoins and banks, Binance will convert the remaining of the 1 billion Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB, and ETH, Binance CEO Chanpeng Zhao wrote in a tweet early Monday.
Binance launched its crypto industry Recovery Fund in November 2022 following the collapse of the FTX exchange. The initiative was aimed to help projects who are otherwise strong but in a liquidity crisis.
The move also comes in the wake of Paxos, BUSD's owner and issuer, being hit by a lawsuit from the United States Securities and Exchange Commission (SEC), with the agency claiming last month that the firm violated investor protection laws. Paxos announced it would halt BUSD minting and "end its relationship with Binance," for the stablecoin.
It is not immediately clear how much money from Binance's fund has been converted or is earmarked to be converted into the mentioned coins.
The ETH address shared by CZ shows some substantial transfers over the past few hours, with the original wallet almost emptied at the time of this writing. Transactions are continuing to be executed at the time of writing.
It's worth noting that last September Binance began auto-converting USDC deposits into its native BUSDeffectively delisting the rival stablecoin.
Decrypt reached out to Binance for additional comments but was yet to hear back by press time.
Furthermore, Binance's decision comes hot on the heels of the USDC stablecoin depegging from its intended $1 price.
The depegging event was triggered by the ongoing crisis surrounding the collapse of the Silicon Valley Bank (SBV), where the firm holds about $3.3 billion.
Silicon Valley Bank was among the 20 largest banks in the U.S. when it failed Friday after a bank run by customers. California state regulators placed the bank under the control of the FDIC, which in turn created a new entitythe Deposit Insurance National Bank of Santa Clarathrough which the remaining assets will be managed.
USDC plummeted to an all-time low of $0.87 on Friday night.
The collapse of SBV, preceded by the meltdown of the Silvergate Bank, also sent shockwaves through the stock market, while the crypto industry saw a depressing drop as well, with Bitcoin crashing below $20,000 for the first time since mid-January.
In a separate move, the Federal Reserve moved to shut down the Signature Bank on Monday morning, another crypto-friendly bank with total assets of around $117 billion as of the end of last year.
The scare, at least for now, appears to be short-lived though: according to a joint statement from the Fed, U.S. Treasury, and FDIC on Sunday, all depositors of now-shuttered Silicon Valley Bank and Signature Bank will be able to get their funds out on Monday.
"Circle is now out of the woods, which is a huge positive for the crypto world, Bradley Duke, co-CEO at ETC Group, said in a statement shared with Decrypt.
Circle has meanwhile stated that it will cover any shortfall caused as a result of the $3.3 billion in its funds held by the collapsed SBV.
The Boston-based company also reiterated that USDC is 100% collateralized with cash and U.S. Treasuries.
According to the firm, USDC is currently collateralized 77% ($32.4B) with U.S. Treasury Bills (with a three month or less maturation period), and 23% ($9.7B) with cash held at a variety of institutions, of which SVB is only one.
The latest news helped the broader crypto market flip green again, with Bitcoin trading around $22,280 by press time, up 9.1% over the day.
USDC is changing hands at $0.989, according to CoinGecko.
Original post:
Binance Swaps BUSD Stablecoin From 'Recovery Fund' to Bitcoin ... - Decrypt
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