Binance has confirmed its intention to convert the equivalent of one billion dollars into Binance USD (BUSD) from its Industry Recovery Initiative in native cryptocurrencies, including Bitcoin, Ethereum and BNB.
In a tweet posted on Monday, Binance CEO Changpeng Zhao said the crypto ecosystem’s largest exchange plans to convert the remaining $1 billion from its Industry Recovery Initiative into BTC, BNB And ETH as the situation for banks and stablecoins continues to deteriorate.
The director later confirmed the successful completion of the transaction in a tweet posted immediately after. Blockchain data shows that the transaction was completed within 5 seconds and cost only $1.29 fee. “Imagine if you could transfer $980 million to a bank before the bank’s opening hours, and that on a Monday,” CZ continued.
This move has ostensibly contributed to the buying pressure, pushing major cryptocurrencies higher. According to data from CoinGecko, BTC, ETH, and BNB all rose by around 8% in the last 24 hours.
Last November, Binance announcement that it was setting up a recovery fund to help rebuild the industry. At the time, Tron founder Justin Sun said the initiative was backed by his own blockchain, as well as Huobi Global and Poloniex.
This decision also comes after Paxos, the owner and issuer of BUSD, is sued by the Securities and Exchange Commission (SEC) of the United States, the regulatory agency saying last month that the company had violated laws relating to the protection of investors. As a result, Paxos announced that it is ending BUSD generation and ending its relationship with Binance.
Concerns over the health of US banks penalize the USDC
This billion-dollar transfer operation from BUSD to major cryptocurrencies is taking place in the same context as the crisis that rocked the banking sector in the United States over the weekend.
On Friday, Silicon Valley Bank, one of the most popular lending institutions for tech companies and start-ups in Silicon Valley, filed for bankruptcy after suffering a liquidity crunch. . Subsequently, the Federal Deposit Insurance Corporation (FDIC) took control of the bank and created the Deposit Insurance National Bank of Santa Clara, which now holds SVB’s insured deposits.
While investment firms and tech startups have taken the brunt of the Silicon Valley Bank collapse, some big crypto companies have also exposed their exposure. For example, Circle, the issuer of the stablecoin USDC, had placed for almost $3.3 billion of its reserves in this now collapsed financial institution.
The news initially sparked a wave of withdrawals and redemptions that led the USDC to distance itself from its target peg of $1. However, the stablecoin has largely corrected its losses over the past day, rallying back to around $0.99 as of this writing.
Of note, Binance has also suspended the auto-conversion of USDC to BUSD due to current market conditions, “specifically related to high inflows and increasing load to support the conversion”, as noted by the exchange platform in a tweet released late Friday afternoon.
Separately, CZ once again advanced the idea of cryptocurrency-backed stablecoins while saying that “banks pose a risk to fiat-backed stablecoins.” He also added that Do Kwon had a good intuition but that he hadn’t been able to make his project stick in the long term.