Paxos, the issuer of stablecoin Binance USD (BUSD) with a market cap of $16 billion, has burned more than $700 million in BUSD tokens since the start of this week.
According to data from blockchain research firm Nansen, a wallet from Paxos coffers moved $703 million worth of BUSD tokens to an incineration address within 27 hours starting the morning of Feb. This is basically the process of removing these coins from circulation.
Paxos Treasury sent the first transaction worth $144.5 million BUSD early on Feb. 13. Soon after, eight more transactions were made a few hours later, worth about $559 million.
Over $400 million $BUSD was burned in less than 20hrs as the New York Department of Financial Services ordered Paxos to stop issuing BUSD
According to WSJ, “BUSD will continue to be redeemable through at least February 2024 for US dollars or Paxos’ own stablecoin, Pax Dollar.” pic.twitter.com/cpU7jiEG5M
— Nansen (@nansen_ai) February 14, 2023
BUSD is a stablecoin issued by New York-based financial technology company Paxos Trust Company, backed by cash and US Treasury bills in reserve.
Investors have the right to redeem their BUSD for Paxos, which means the company will hold the investor’s BUSD to burn and return the dollars to them. This process will cause the number of tokens in circulation to decrease while the price remains pegged at 1 USD.
Returning to the topic of the article, the above move is a sign that investors are quickly exiting BUSD. Notably, the buyback of up to 700 million USD in more than one day accounts for about 6% of the total value of BUSD in circulation, while in a more general picture, the circulating supply of BUSD has continued to decline. In January 2023, it plunged further after a drop of nearly 6 billion USD because of the chain of Binance exchange in December 2022.
The news broke over the weekend when the United States Securities and Exchange Commission (SEC) filed a notice suing Paxos alleging stablecoin BUSD is a security, signaling an imminent enforcement action from the agency. management agency. On the other hand, the New York Department of Financial Services is also probing the company and has ordered Paxos to stop minting new BUSD tokens.
Under such great pressure from the US government, Paxos also suffered “another heavy attack” from his close friend, the CEO of Binance when he directly voiced his negative feedback about the relationship. relationship between Binance and the company in the middle of the storm. This is also the main reason why the amount of money withdrawn from Binance increased again because of the Paxos – BUSD crackdown.
Synthetic Kyptos
