$4B deposit flight from Binance, Coinbase and Binance.US due to SEC clampdown.
The U.S. Securities and Exchange Commission (SEC) has filed lawsuits against Binance, Binance.US, and Coinbase, resulting in the withdrawal of approximately $4 billion from the three crypto exchange giants, according to blockchain data.
Between Monday and Thursday, Nansen and Glassnode, two blockchain analytics firms, reported a combined net outflow of $3.1 billion via the Ethereum network and $864 million in bitcoin (BTC). Net outflow refers to withdrawals exceeding incoming deposits.
The exchanges conducted withdrawals in an orderly manner throughout the week. The SEC first filed a lawsuit on Monday against Binance, its U.S.-based entity Binance.US, and chief executive Changpeng “CZ” Zhao for numerous violations of federal securities laws. The agency then sued Coinbase on Tuesday for offering unregistered securities to the public.
The market for cryptocurrencies was unsettled by these actions, with tokens characterized as securities in the lawsuits, including Binance’s BNB, Cardano’s ADA, and Polygon’s MATIC, experiencing the most significant decline during the week. The SEC is seeking to freeze assets on Binance.US, causing BTC and ether (ETH) to trade at a significant premium for a period as traders and market makers retreat from the platform.
The regulatory clampdown spooked crypto traders, prompting them to withdraw their funds en masse from the exchanges targeted by the SEC.
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According to Nansen data, Binance, the world’s largest crypto exchange by trading volume, saw a net outflow of $2 billion on the Ethereum blockchain in four days. The metric includes ETH and all Ethereum-based tokens. According to Glassnode data, BTC withdrawals also exceeded deposits by roughly $838 million (31,868 BTC) during this period.
Wednesday’s net outflow of 13,953 BTC was the most significant daily drawdown since last December, when a flawed reserve report shook investor confidence in the exchange.
Although this week’s outflows were significant, they represent only about 5% of all assets on the exchange, according to Binance’s crypto wallets.
From Monday to Thursday, Coinbase experienced $1 billion in net outflows via Ethereum, according to Nansen. Glassnode reported BTC outflows totaling $25 million.
According to Nansen data, Binance.US saw net outflows of $75 million on Ethereum. The platform is not tracked by Glassnode.
The U.S.-based exchange announced on Friday that users should withdraw USD as soon as possible following the SEC’s “extremely aggressive and intimidating tactics” against the company. The platform has suspended U.S. dollar deposits and will soon delist USD trading pairs while temporarily transitioning to a crypto-only exchange.
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Edited by James Rubin.