Following the issuance of a Wells Notice from the Securities and Exchange Commission (SEC) to Binance USD (BUSD) issuer Paxos, the stablecoin has taken a hit in the market. Its market cap plunged rapidly as the firm was ordered to stop issuing new tokens and redemptions of the stablecoin surged. There has since been a slowdown in the selling but BNB whales are still getting rid of the troubled stablecoin in high numbers.

BNB Whales Dump Binance Stablecoin

According to data from the whale tracking website WhaleStats, the top 100 BNB whales are still shedding their BUSD holdings. In a 7-day period, these large investors have sold a little over 2 million BUSD on average, making it the largest token sold by them in the one-week period.

Usually, these whales tend to trade stablecoins such as BUSD back and forth for other digital assets. But this time around, there aren’t any of the stablecoins coming back into their wallets. Rather, they have turned to BSC-USD of which they have purchased an average of $101,040 in the last week.

This comes as no surprise given that there are no new BUSD being put into circulation and as such, investors are beginning to move out of the stablecoin as liquidity declines. Additionally, the usage of the BUSD smart contract among these large investors has also declined.

In the last 24 hours, smart contract usage has dried over 83%, although it still remains the sixth most used smart contract around them. Meanwhile, the average transaction size of Binance USD among the whales has dropped significantly to just $8 while the average transaction size for BTC-USD has grown to $42,843.

Despite the large sells, BUSD still remains the largest token holding excluding BNB among the top 100 whales. They still hold a collective $535.48 million in the stablecoin, which works out to approximately 47.12% of their total holdings.

BUSD Market Cap Sheds 50%

Amid all of the redemptions and Paxos agreeing to stop issuing new coins, the BUSD market cap has taken a hit. The stablecoin began the year 2023 trending above a $16 billion market cap carrying on business as usual, but in the one month since the SEC’s decision, the stable coin’s market cap has dropped to $8.369 billion.

This decline has seen Binance USD drop to the 10th spot on the list of largest cryptocurrencies by market cap, where before, it was constantly competing for the 6th and 7th spots on the list. It is now also behind Dogecoin whose market cap now sits at $1 billion higher than BUSD.

Nevertheless, the stablecoin has been able to maintain its parity with the U.S. dollar and continues to trade on peg. It is still seeing significant trading volumes above $8 billion, although its trading volume is down 20% in the last day following the announcement that Binance was moving its zero-fee trading pairs to TUSD.