Binance’s stablecoin, Binance USD, has seen around $6 billion of outflows following a US regulatory crackdown on the company that issues the token, according to market tracker CoinGecko.
Paxos Trust Company, which issues Binance USD, said on Feb. 13 that the US Securities and Exchange Commission (SEC) had told the company it should have registered the product as a security and is considering taking action against the platform.
On the same day, New York’s chief financial regulator said in a consumer alert that it had ordered Paxos to stop creating the token.
An NYDFS spokesperson later told Reuters via email that Paxos violated its obligations for “tailored, periodic risk assessments” and due diligence checks on Binance and Binance USD customers needed to stop “bad actors from using the platform”.
Binance CEO Changpeng Zhao said that the regulator’s decision meant the market cap of the token would decrease over time.
On Wednesday, the value of all Binance USD was around $10.5 billion, down from $16.1 billion on Feb. 13, according to market tracker CoinGecko.
The Financial Times reported on Wednesday that investors have pulled more than $6 billion out of the Binance-branded token in the past month, citing data from blockchain analytics firm Nansen.
Analysts said the NYDFS move represented a setback in Binance’s efforts to gain market share from larger stablecoins.
SEC Chair Gary Gensler has previously said he believes some stablecoins to be securities.