Circle Internet Financial, the company behind USDC stablecoin, warned the New York State Department of Financial Services (NYDFS) about Binance's inaccurate management of reserves for tokens minted on BNB Chain (formerly Binance Smart Chain), Bloomberg Law has learned, citing a person familiar with the matter.
Subscribe to our Telegram channel to get daily short digests about events that shape the crypto world
Details of Circle's report submitted to the watchdog last autumn remain undisclosed, but Bloomberg says the company's analysts had showed that Binance didn't have enough reserves to support tokens issued on BNB Chain.
On Monday, February 13, the NYDFS ordered Paxos Trust, a company that issues stablecoins, to suspend minting binance USD (BUSD), citing several "unresolved issues" related to the firm's oversight of its relationship with Binance. The NYDFS noted it had authorized Paxos to issue BUSD only on the Ethereum blockchain, while Binance's version of the stablecoin issued on BNB Chain lacks this authorization.
Paxos acknowledged it would cease minting new BUSD tokens starting from February 21, adding that the move would "end its relationship with Binance for the branded stablecoin BUSD."
In September 2022, Binance terminated support for three stablecoins — USDC, USDP and TUSD — in order to "enhance liquidity and capital-efficiency." While the exact cause behind the move remains unclear, a spokesperson for Circle told TechCrunch that Binance's decision to delist the stablecoin "does raise potential market conduct questions."
Access more than 50 of the world's financial markets directly from your EXANTE account – including NASDAQ, London Stock Exchange and Tokyo Stock Exchange