Binance Halts Solana USDT/USDC Deposits, SOL Price Drops

Binance revealed Thursday morning that deposits of USD Coin (USDC) and Tether (USDT) on the Solana blockchain have been temporarily halted until further notice, following similar moves by competing exchanges OKX and Crypto.com. While Crypto.com referenced recent industry turmoil in its decision, Binance offered no specific justification for suspending the two most popular stablecoins on Solana’s network. OKX went further, declaring it would completely remove USDC and USDT from Solana’s list of supported currencies and would no longer support their deposits or withdrawals.

The coordinated actions by three major exchanges represent a significant blow to Solana’s ecosystem credibility, particularly coming in the immediate aftermath of FTX’s collapse and bankruptcy announcement. The timing suggests exchanges are taking precautionary measures amid the broader market uncertainty, though the lack of technical explanations has raised questions about their motivations.

The Solana blockchain’s SOL token immediately felt the impact, testing its post-FTX low of $12.45 after Binance’s announcement. According to price analytics site CoinMarketCap, SOL fell by 3.48% to trade at $13.70, representing a 3.03% decrease over the previous day. The decline extends the bear market’s already dire circumstances for Solana investors, compounding losses from the previous week’s FTX-induced selloff.

Decentralized applications built on Solana have suffered approximately $700 million in losses during the ongoing crisis, with further declines anticipated once FTX and Alameda’s assets begin liquidation as part of their insolvency proceedings. The primary concern remains rumors that Alameda Research might sell its substantial SOL holdings, creating additional selling pressure in an already fragile market.

Circle, the issuer of USDC, expressed confusion about the exchange decisions through its co-founder and CEO Jeremy Allaire, who tweeted that USDC on Solana is natively issued by Circle and functioning properly. The company’s official Twitter account reinforced this message, stating: ‘USDC on Solana is operating as expected and there are no issues with issuing or redeeming USDC. USDC is always redeemable 1 for 1 for US dollars. Any amount. Any time. For Free. Always.’

Some industry participants suspect ulterior motives behind the exchange actions. Twitter user @snoworly commented: ‘There are clear ulterior motives at play if they make moves against Solana and USDC right now. These are not actions in the interest of the industry.’ The sentiment reflects growing suspicion that exchanges may be acting competitively rather than responding to genuine technical concerns, given Circle’s confirmation of normal operations.

The rapid demise of FTX has resulted in declining perception of the entire Solana ecosystem, with exchange actions amplifying negative sentiment despite the network’s technical functionality. The situation highlights how exchange decisions can significantly impact blockchain ecosystems independent of their actual technical performance or stability.

Importantly, these suspensions only affect users choosing to use stablecoins through the Solana network. Users can still access USDT and USDC through alternative networks like Ethereum, Polygon, and Algorand without interruption. This network flexibility provides some mitigation for stablecoin users, though it represents a significant setback for Solana’s positioning as a leading blockchain for decentralized finance applications and stablecoin transactions.