Crypto

Crypto exchange mum on abrupt halt to stablecoin deposits

Artwork: Brendan Lynch/Axios

Binance and OKX suspended deposits to Solana blockchain-based stablecoins Circle (USDC) and Tether (USDT) yesterday, in a confusing display of crypto exchange operations.

why is it important: The two leading dollar-pegged stablecoins by market capitalization are listed on dozens of exchanges, but the sudden and unexplained actions taken by a few of these exchanges raise questions about the stability of the Solana ecosystem.

Details: Beyond the suspension notices, the exchanges said little more to explain the reason for the abrupt decision.

  • “Just additional on-chain risk mitigation,” Lennix Lai, director of financial markets at OKX, told Axios.

Between the lines: The suspension of support for the two major Solana-based stablecoins has been widely noticed with the announcement of Binance, but the first to act was Crypto.com, when the exchange stopped their Last week in the chaos of FTX’s unfolding.

  • The head of Crypto.com said withdrawals, in general, resumed.
  • Victoria Davis, Vice President of Corporate Communications at Crypto.com, later clarified in an email to Axios: “We have temporarily disabled the ability to withdraw or deposit USDT and USDC via the Solana protocol due to conditions of the Solana network and the risk posed by FTX’s important role as a Solana-based stablecoin bridge and trading venue.”
  • Binance repossessed deposits for USDT yesterday, “after internal assessment and review”. A Binance spokesperson pointed Axios to this post when asked about USDT and USDC. No word yet on USDC.
  • OKX posted a message on its website yesterday saying it would remove these tokens at 3:00 UTC or 10:00 p.m. ET. He updated the post to say that support for deposits and withdrawals would be discontinued. (It’s effectively the same thing but with a less harsh wording.)

What they say: If there was an angle related to FTX for the move, it wasn’t obvious: “Is there an angle with Alameda that I don’t understand that’s causing the write-offs?” twitter user @cmsholdings asked.

  • Circle CEO Jeremy Allaire responded, “It’s unclear what the motivations are for the exchange actions, which are disappointing.”
  • Circle spokeswoman Rachel Busch told Axios that the USDC natively issued on Solana “works well.”

what others say: Kraken backs Solana-based USDC, stock market’s Bill King tweeted yesterday.

The context: The FTX contagion has spread to Solana Ecosystem quickly, thanks to the leadership role of FTX founder and former CEO Sam Bankman-Fried (SBF) in this community.

The plot: If Circle posed a risk, exchanges might have reason to check things out.

  • Some alarm bells were sounded when Circle’s Earn product performance showed zero on Wednesday; archived web pages showed a 0.25% return on them the previous day.
  • The change seemed to coincide with World genesisWinklevoss’ crypto lending unit announced it would halt client withdrawals and lending, leading the Winklevoss twins’ Gemini exchange to suspend its high-yield Earn product.
  • “Circle elected to take the yield from 0.25% to 0% before Genesis closes its credit lines,” said Busch, the Circle spokesperson. “Circle Yield has always been driven by demand for borrowing in crypto capital markets.”

What we are looking at: Circle is expected to file its third quarter results in a few days.



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