Paxos, the issuer of Binance’s stablecoin BUSD, recently announced that it would no longer mint the dollar-pegged asset from February 21.

The decision came after the SEC threatened legal action against the New York Department of Financial Services (NYDFS) regulated company for allegedly selling unregistered securities. However, BUSD is a stablecoin.

Paxos expressed its disagreement with the SEC staff in a statement on February 13, saying that BUSD is not a security under the federal securities laws. As a result, panic has set in, and redemptions of BUSD have skyrocketed over the past few hours.

Industry analysts have labeled this a clandestine attack on Binance. The BUSD run has caused a 2.2% decline in supply in just a few hours.

Before the announcement, there was $16.15 billion BUSD circulating, but over the past 12 hours, that has shrunk to $15.79. This means that around $360 million has been redeemed.

Moreover, outflows from Binance have also surged as investors react to the news. According to Nansen, more than $830 million in outflows from the platform were recorded over the past 24 hours.

Exchange activity on February 13 marked the largest daily net outflows from Binance since November.

BUSD comprises the second-largest reserve asset after Tether (USDT), and with around $13.4 billion BUSD in reserve, the stablecoin accounts for roughly 22% of Binance’s total treasury.

Furthermore, BUSD temporarily lost its peg slightly when redemption volume started increasing. However, CEO Changpeng Zhao has confirmed that the FUD was temporary.