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

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

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.

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

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

The derivatives giant will extend futures and options access to round-the-clock trading in early 2026

by Blockworks /
article-image

Global fiber network goes live as SEC clears 2Z token for utility use

by Blockworks /
article-image

The SPAC transaction positions Avalanche Treasury Co. as a Nasdaq-listed vehicle for institutional AVAX exposure by 2026

by Blockworks /
article-image

The collaboration brings regulated money market fund exposure to Polygon, with custody provided by Standard Chartered

by Blockworks /
article-image

FG Nexus teams with Securitize to bring its Nasdaq-listed equity onchain, offering tokenized stock trading through Ethereum

by Blockworks /
article-image

Sponsored

Taiko launches binding onchain governance and appoints three directors with expertise in global regulation, business strategy and blockchain tech

by Sponsored /