Binance, the world’s largest cryptocurrency exchange, is facing massive withdrawals as thousands of investors withdraw their funds from the platform in response to the recent lawsuit filed by the Securities and Exchange Commission (SEC).
The crypto withdrawals on Binance come after the SEC alleges that the exchange and its CEO, Changpeng Zhao, violated several federal securities laws.
According to on-chain data from blockchain analytics platform CryptoQuant, Binance recorded a net outflow of 11,380 bitcoins (equivalent to approximately $292.9 million) in the first few hours after the process opened.
Additionally, Ethereum (ETH) withdrawals totaled approximately $165.4 million. The massive withdrawals are a desperate attempt by investors to avoid the counterparty risk arising from the SEC lawsuit against Binance.
Meanwhile, the Nansen platform has seen significant negative flows on the Ethereum network over the past 24 hours. According to company data, Binance’s net outflow on the Ethereum network, including ETH tokens, ERC-20 and stablecoins, was a whopping $1.65 billion.
Net flow into Binance in the last 24 hours is $778.6 million negative on Ethereum – $871.7 million in and $1.65 billion out
In the past hour, net flow on Ethereum remained negative at $35.7M on Ethereum – $14.8M in and $50.5M out
Follow it here https://t.co/nwTgpXWhZY and filter by “Binance” pic.twitter.com/jnNAN0QKVy
— Nansen 🧭 (@nansen_ai) June 6, 2023
Bulk withdrawals on Binance
While the withdrawals are significant, CryptoQuant notes that they are lower than those recorded by Binance following the March 2023 lawsuit filed by the Commodity Futures and Trading Commission (CFTC).
During the so-called “regulatory FUD” following the collapse of the FTX, Binance recorded a net outflow of 40,353 bitcoins in one day, worth more than $690 million.
In addition, between December 10 and December 16, 2022, the exchange recorded net outflows totaling $1.4 billion in bitcoin, during a period of heightened turmoil.
SEC is suing Binance and CEO
The SEC’s allegations in the lawsuit relate to the sale of unregistered securities by Binance’s US subsidiary, Binance.US, without proper authorization.
The SEC also alleges that the exchange improperly moved client funds and that Changpeng Zhao secretly continued to control Binance.US despite claiming to be independent from the US entity.
While Binance has denied the SEC’s allegations and stated it will vigorously defend its platform, the lawsuit has already sparked panic in the cryptocurrency market, with the BNB token and other key assets trading lower.
Investors are closely monitoring developments in the case and assessing the impact of regulatory action on the cryptocurrency industry.
Bitcoin has retreated 5% in the past 24 hours and is now trading at USD 25,700. Such a decline is quite common for the digital currency, but it could mean a worse case scenario as the markets have been extremely quiet lately.
The SEC has also labeled a large number of cryptocurrencies as securities, and those have also been hit hard. Next to BNB, Cardano (ADA), down 7%, Solana (SOL), down 8% and Polygon (MATIC), down 6.6%.
Other cryptocurrencies in the SEC’s crosshairs include Algorand (ALGO), Cosmos (ATOM), Filecoin (FIL), Sandbox (SAND), Decentraland (MANA), and Axie Infinity (AXS).
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Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
