Circle, the company behind USDC stablecoin, was a competitor to Binance’s BUSD. In the fall of 2013, New York’s financial watchdog was notified by Circle about irregularities its team had discovered from blockchain data. The confidential information revealed that Binance didn’t have enough cryptocurrencies in its reserves to support the tokens it had issued through Paxos.
War Of The Stablecoins
This news comes hours after Paxos, the largest regulated blockchain and tokenization platform platform, was told by regulator to stop issuing Binance USD stablecoins. The regulator cited “several unresolved problems related to Paxos” as well as its undefined relationship to Binance’s Binance exchange in relation to the branded stablecoin.

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Many believe that Circle was tipped off by Binance, who reportedly stopped supporting USDC and began auto-converting USDC to BUSD late last year. Circle’s share of stablecoin markets steadily declined as a result. Coinbase made a similar effort, and launched a zero-fee swap that allowed retail customers to exchange USDT against USDC. Coinbase was one of the founding members of Circle, which issued the USDC stablecoin.

Switch to USD Coin (USDC) for a trusted stablecoin. Now convert Tether (USDT) to USDC with zero fees.https://t.co/OObSqNWdpj
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— Coinbase (@coinbase) December 8, 2022
Circle’s Big Concern about BUSD

The “cold war against stablecoins” is what the NYDFS complaint against BUSD was filed under. It was based on the pretext of a brewing rivalry among market players.
Circle raised the primary concern that Binance mints its own versions third-party coins such as Bitcoin and Ether. Paxos’s USDC, Circle’s BUSD and Circle’s USDC are also available. This is done in order to make these coins usable on other blockchains than those for which they were originally created. For example, the platform’s own BNB Smart chain. Circle argued that these coins, also known as Binance-peg and B-Tokens, were inconsistent with the 1:1 ratio declared by the crypto exchange.

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The USDC’s B-Token version was also affected. According to reports, Binance only had $100 million of collateral in place to cover the $1.7 billion Binance-peg USDC. According to CoinGape’s crypto market monitor, Circle’s USDC currently has approximately $40.8 billion in circulation, while BUSD has about $15.8 billion.
Also read: This DeFi Platform has frozen its BUSD Reserves; which ones are next?

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