The world’s largest cryptocurrency exchange Binance announcedthat on December 15, 2023 it will stop supporting the stablecoin Binance USD (BUSD) and convert client balances to another stablecoin – First Digital USD (FDUSD), reports RBC Crypto.
Until December 15, users can independently withdraw BUSD from the exchange or exchange it for another stablecoin or cryptocurrency. The company has previously encouraged its users to convert BUSD to other stablecoins.
BUSD was launched in 2019 as part of Binance’s Project Venus, “an initiative to develop localized stablecoins and digital assets pegged to fiat currencies around the world.” The coin used the Binance brand and was positioned as the “official” stablecoin of the exchange, although it was issued by a third-party company. BUSD got off to a relatively slow start, with a capitalization below $200 million for several months, but it exploded at the end of 2020. By November 2022, the capitalization of the stablecoin was already $23.5 billion, but by the beginning of 2023 it decreased by almost 30%, falling to $16.5 billion.
In February 2023, the US Securities and Exchange Commission (SEC) sued the issuer of the BUSD stablecoin, Paxos Trust. According to the American regulator, the digital asset that Paxos issues is an unregistered security.
Following this, the New York State Department of Financial Services (NYDFS) ordered Paxos to completely stop issuing new BUSD tokens. Listing the consequences of the termination of the issue, the then head of the Binance exchange, Changpeng Zhao, admitted that the capitalization of the asset would continue to decline, and investors would begin to move to other stablecoins.
On August 4 this year, Binance launched trading pairs with Bitcoin and Ethereum (ETH) to the new stablecoin FDUSD. By data Coinmarketcap, the current capitalization of this “stable coin” is $775.6 million. For comparison, the capitalization of the largest stablecoin Tether USD (USDT) is more than $89 billion.
Last week, three criminal charges were filed against Binance, including operating an unlicensed financial business, conspiracy and violating the Emergency Financial Powers Act. The text of the indictment occupies 30 pages; the document indicates Binance’s failure to take measures to combat the financing of terrorism and drug trafficking, as well as violation of American sanctions, including servicing clients from Crimea, DPR and LPR.
As part of the deal aimed at resolving US authorities’ charges against Binance, the exchange is required to pay a fine of $4.3 billion, and its founder Changpeng Zhao left his position as head of the company. Zhao also pleaded guilty to violating the Bank Secrecy Act and will personally pay a $50 million fine.
In addition to the US regulator, the Philippine Securities and Exchange Commission also took notice of Binance and stated that the company is not registered in the country and does not have the necessary licenses and permits to operate, which could result in criminal liability.
Source: Cryptocurrency
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