- Binance has seen significant outflows as traders have withdrawn funds following the SEC lawsuit.
- Investors have withdrawn to minimize counterparty risks amidst the SEC allegations.
- Recent outflows have surpassed previous instances but are still less than during the FTX collapse.
Binance, the world’s largest cryptocurrency exchange, is experiencing significant net outflows as numerous crypto traders withdraw their funds from the platform in response to the recent lawsuit filed by the United States Securities and Exchange Commission (SEC).
Binance Loses $295M in BTC & $167M in ETH After Lawsuit
On the first day after the lawsuit was filed, Binance witnessed a net outflow of 11,380 Bitcoin (BTC), which, considering the current trading value of Bitcoin at $25,950, amounts to a staggering $295.3 million.
According to data obtained from CryptoQuant, a blockchain analytics platform, the outflow of Ether (ETH) from Binance has also been noteworthy, reaching 91,223 ETH, equivalent to approximately $167 million based on current market prices.
These massive outflows reflect investors’ efforts to mitigate any potential counterparty risks arising from the SEC’s legal action against Binance.
It is worth mentioning that Nansen, another analytical platform, has confirmed a significant increase in ETH withdrawals; however, the exact figures differ slightly.
Binance Sees Lower Outflows Compared to CFTC Incident
Despite the recent surge in withdrawals prompted by the SEC lawsuit, CryptoQuant highlights that they are relatively lower than the outflows observed after Binance faced legal action from the Commodity Futures Trading Commission (CFTC) in mid-March. However, these outflows are still significant when compared to other major instances.
For instance, during the period of regulatory uncertainty following the collapse of FTX, Binance encountered net outflows of 40,353 BTC, surpassing $690 million, in a single day. Between December 10 and December 16, 2022, the exchange experienced net outflows totaling $1.4 billion in BTC. At that time, there was also a notable surge in ETH outflows.
Binance and CEO Changpeng Zhao Face SEC Legal Battle
The recent outflows directly result from the SEC’s allegations against Binance and its CEO, Changpeng Zhao, accusing them of violating multiple federal securities laws.
The lawsuit, filed on Monday, specifically mentions the sale of unregistered crypto securities, such as BNB and BUSD tokens, without proper authorization by Binance’s American affiliate, Binance.US.
The SEC also claims that Binance mishandled and mixed customer funds and that CZ maintained control over Binance.US, despite claiming independence from the American entity.
Although Binance has refuted the SEC’s claims, the lawsuit has already injected fresh panic into the cryptocurrency market, leading to declines in the value of BNB and other major assets.
On the Flipside
- The significant net outflows from Binance reflect the sentiment and concerns within the crypto community rather than the outcome of the ongoing legal case against Binance.
- The lawsuit against Binance is still in its early stages, and the outcome is uncertain. It remains to be seen whether the SEC’s claims will hold up in court or if Binance can refute them effectively.
- The market volatility triggered by the lawsuit presents potential opportunities for some investors; however, it is important to remain cautious and exercise prudent decision-making due to the unpredictable nature of such events.
Why This Matters
The outflows from Binance after the SEC lawsuit highlight the significance of regulatory compliance and its impact on major players in the crypto industry. It emphasizes the need for caution and adaptability in navigating regulatory challenges.
To learn more about the continued crypto outflows and the impact on trading volume, read here: