Binance temporarily pauses withdrawals of USDC stablecoin

Binance, the world's biggest cryptocurrency trading exchange, announced Tuesday it has temporarily paused withdrawals of USDC stablecoin from its platform.

"#Binance is conducting a token swap involving $USDC. As a result, $USDC withdrawals are temporarily paused," it wrote on Twitter. "$USDT & #BUSD withdrawals are available and unaffected. $USDC withdrawals will reopen once the token swap is completed."

The move comes as investors are worried that an implosion by rival exchange platform, FTX, could cause a snowball effect in the crypto market and negatively affect Binance.

The company also sees increased withdrawals from users on its platform in recent days after reports by the Wall Street Journal raised red flags about its corporate structure, transparency and stress tests.

Co-founder and CEO Changpeng Zhao said in a tweet that Binance saw $1.1 billion worth of withdrawals Tuesday.

"We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us. I actually think it is a good idea to 'stress test withdrawals' on each CEX on a rotating basis," he said.

Binance has been under investigation by the US Justice Department since 2018 but prosecutors are divided about how and when to move on the company, regarding money laundering and sanctions, according to news reports.

USDC, the second biggest stablecoin with a $42 billion market cap, is used by crypto investors to rapidly trade different cryptocurrencies without the need to move and convert money into fiat currencies such as the US dollar.