SEC Triggers Billion-dollar ‘Bank Run’ on Binance’s BUSD

BUSD’s circulating supply has dipped by 26% since Paxos received a Wells notice from the SEC

article-image

Satheesh Sankaran/Shutterstock.com modified by Blockworks

share

It has been a rough ride for Binance-owned stablecoin BUSD since Paxos received a Wells notice from the SEC.

In a company email last week, Paxos noted that since its decision to halt minting the cryptocurrency, more than $2.8 billion in BUSD redemptions had been made with no significant disruptions to the market.

While Paxos acknowledged redeeming billions in its company email, it’s unclear whether an equivalent amount of cash has been exchanged for the amount burned since. Blockworks has reached out for comment.

Now, as of 11:00 am ET on Friday, about $4.892 billion BUSD has been burned since the notice was issued, averaging $407.7 million daily, per blockchain data reviewed by Blockworks.

BUSD burns have picked up, but still pale in comparison to the $3 billion-plus burn day in December | Chart by David Canellis

The stablecoin’s dollar peg has also been wavering on certain markets, hitting $0.99 earlier this week, according to CoinGecko.

BUSD’s circulating supply has shrunk by 26% following the SEC probe. There is roughly $11.4 billion BUSD circulating in the market today, almost half the size of its total circulating supply at its peak last November.

Despite the sharp drop in market capitalization, BUSD still remains the third largest stablecoin, following Tether’s USDT which has a market cap of $70 billion and Circle’s USDC which has a market cap of $42 billion.

Paxos has, too, noted that it would continue to support BUSD until at least February next year “and maintain the highest standards of security and soundness in the stablecoin market.”

“We remain fully focused on serving the end holders of BUSD and protecting them from undo harm,” the company said in the email to its staff.

Zhong Yang Chan, head of research at CoinGecko, told Blockworks that in the longer term, the events conspiring at Binance could motivate the industry to continue innovating toward decentralized stablecoins.

“There have already been efforts in this direction post-UST collapse and the censorship of Tornado Cash, and we have seen renewed interest in this sector as new stablecoins such as Aave’s GHO and Curve’s crvUSD prepare to launch in the market,” he said.

Updated Feb. 24, 2022 at 11:28 am ET: Added context.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

morpho 2 graphic.png

Research

Utilizing a ‘DeFi Mullet’ approach, Coinbase’s Bitcoin-backed loans integration with Morpho demonstrates a powerful blueprint for CEXs to monetize dormant assets by expanding adoption of wrapped products (cbBTC, USDC) while also supporting native and/or preferred DeFi ecosystems (Base) which can further lead to downstream growth in onchain liquidity and increased utilization of the related assets.

article-image

The firm behind Helium announced that it reached a settlement with the SEC

article-image

SKALE’s Jack O’Holleran said that certain metrics are becoming more important to gauging the success of a project

article-image

Mary Gooneratne, co-founder of Solana DeFi startup Loopscale, wants to give blockchain borrow-lend a facelift

article-image

BlackRock, Fidelity and others had their spot ETH EFTs approved, and we may see more crypto products come to market

article-image

Inflation reached a five-month low in March, but 10% blanket levy may impact prices

article-image

The administration announced a pause on reciprocal tariffs, but the bond market shows signs of trouble