In December 2025, Binance temporarily halted USDC withdrawals across several blockchain networks — including Ethereum, BEP2, and TRON — sparking widespread speculation about potential liquidity issues. While Binance CEO Changpeng Zhao (CZ) clarified that the move was part of previously announced system maintenance, discrepancies in the timeline and scope of the suspension raised questions. Amid growing uncertainty, Tron founder Justin Sun stepped in with a major $100 million USDC deposit to Binance, signaling strong market confidence and igniting discussions around exchange stability, stablecoin convertibility, and on-chain liquidity dynamics.
Why Did Binance Pause USDC Withdrawals?
Binance officially attributed the USDC withdrawal pause to scheduled upgrades on the BNB Smart Chain (BEP20) and BNB Beacon Chain (BEP2). CZ pointed to a prior announcement outlining planned network maintenance. However, on-chain data revealed inconsistencies:
- On December 13, BEP2 withdrawals were paused while BEP20 remained functional — contrary to the original maintenance schedule, which listed BEP20 first.
- The suspension also extended to Ethereum and TRON-based USDC withdrawals, neither of which were mentioned in the official notice.
This mismatch fueled speculation that factors beyond routine maintenance might be at play. Notably, other assets like FTM continued normal operations across all three chains, further undermining the argument that the issue was purely technical or chain-wide.
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Justin Sun’s $100 Million USDC Transfer: A Liquidity Lifeline?
On-chain analytics platform Lookonchain reported that Justin Sun transferred $100 million worth of USDC from Circle’s reserve address directly to Binance’s hot wallet. Sun publicly stated the transaction was part of “normal business operations” and coordination with exchange partners.
Interestingly, earlier that day, addresses linked to Sun had withdrawn over $30 million in BUSD and $15 million in USDT from Binance. He then sent the BUSD back to Paxos (the issuer of BUSD) for redemption and converted USDT into USDC via Circle — a process that likely involved traditional banking rails.
This sequence suggests a strategic reallocation of stablecoin holdings rather than an emergency bailout. Still, the timing and scale of the deposit sent a powerful message: key industry players are actively supporting Binance’s liquidity position during a period of heightened scrutiny.
Wintermute Adds $150 Million in USDC Support
Adding further credibility to Binance’s stability claims, market maker Wintermute moved $153 million in USDC from Coinbase to Binance on the same day, ultimately depositing $149.85 million. This marked one of Wintermute’s largest single-day inflows in nearly three weeks.
Such actions by professional trading firms indicate confidence in Binance’s solvency and risk management. Market makers like Wintermute typically avoid exchanges showing signs of financial strain due to counterparty risks. Their participation helps restore order, tighten spreads, and ensure smooth trading operations.
CZ Explains the Banking Bottleneck
CZ addressed concerns by explaining that converting PAX or BUSD into USDC requires movement through a U.S.-based bank account in New York. Since banks operate on standard business hours, this creates a temporary delay in fulfilling large-volume USDC requests.
"On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open."
— CZ 🔶 BNB (@cz_binance)
He emphasized that all conversions are backed 1:1 with no leverage involved and encouraged users to withdraw alternative stablecoins like BUSD or USDT if immediate access was needed.
Regarding Sun’s cross-chain activity involving TRON-based BUSD, CZ noted it was unrelated to Binance’s internal processes and fell under separate ecosystem mechanics.
Stablecoin Price Divergence Signals Market Stress
Following the news, minor but noticeable price deviations emerged between major stablecoins:
- BUSD briefly traded at a discount of up to 0.11% against USDT (reaching $0.9989 per BUSD).
- While still within typical volatility bands, such gaps reflect short-term supply-demand imbalances and user preference shifts during uncertainty.
These micro-movements are closely watched by arbitrage traders who help restore parity by exploiting price differences across exchanges and markets.
Net Outflows Slow Compared to FTX Crisis
Despite a reported $1.6 billion net outflow from Binance in 24 hours (ETH and ERC-20 tokens only), blockchain analytics firm Nansen observed that total weekly outflows had decreased compared to earlier market shocks.
- 7-day net outflow: $1.9 billion
- Post-FTX collapse weekly outflows: $2.3 billion
This indicates that while some users withdrew funds, the pace remains below critical levels seen during previous industry crises. The market appears more resilient, with institutional and retail participants responding with caution rather than panic.
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Frequently Asked Questions
Q: Was Binance really facing a liquidity crisis?
A: No conclusive evidence supports a full-scale liquidity crisis. Temporary withdrawal delays stemmed from banking processing times and operational bottlenecks, not insolvency. Support from figures like Justin Sun and Wintermute reinforces confidence in Binance’s financial standing.
Q: Why can’t Binance instantly convert BUSD to USDC?
A: The conversion involves redeeming BUSD with Paxos, transferring USD through a New York-based bank, then purchasing USDC via Circle. This process depends on traditional banking hours and compliance checks, creating delays during high-demand periods.
Q: Is it safe to hold stablecoins on exchanges?
A: Holding stablecoins on reputable exchanges is generally safe for active traders. However, long-term holders should consider self-custody using secure wallets to minimize counterparty risk.
Q: What role do market makers like Wintermute play?
A: Market makers provide liquidity, stabilize prices, and reduce slippage. Their presence on an exchange signals trust in its operations and helps maintain orderly markets during volatile events.
Q: How did Justin Sun’s actions impact market sentiment?
A: His $100 million deposit acted as a confidence booster. Though framed as routine business, the move reassured users that major crypto figures continue to support Binance’s infrastructure and liquidity needs.
Q: Are stablecoins truly 1:1 backed?
A: Reputable issuers like Circle (USDC) and Paxos (BUSD) publish regular attestations confirming full reserves. Regulatory oversight and transparency reports help verify these claims, though due diligence is always recommended.
The events of December 2025 highlight the interconnected nature of crypto infrastructure — where blockchain activity, banking systems, and market psychology converge. While temporary disruptions occur, robust mechanisms exist to restore balance quickly.
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