SEC crackdown triggers $4 billion deposit leak from Binance, Coinbase and Binance.US

US Securities and Exchange Commission (SEC) lawsuits against Binance, Binance.US and Coinbase have spurred the outflow of some $4 billion in deposits from crypto exchange giants, according to data from the blockchain.

The three exchanges saw a combined net outflow of $3.1 billion through the Ethereum network and $864 million in bitcoin (BTC) between Monday and Thursday, according to data from blockchain analytics firms Nansen and Glassnode. Net outflows mean that withdrawals exceeded inflows.

Exchanges processed withdrawals in an orderly fashion throughout the week.

The SEC first filed a lawsuit on Monday against Binance, its U.S.-based entity Binance.US and its chief executive Changpeng “CZ” Zhao, for a series of violations of federal securities law. Then the agency sued Coinbase on Tuesday for offering unregistered securities to the public.

Learn more: Binance and Coinbase: Experts Assess What’s Next

Stocks have disrupted the cryptocurrency market, with tokens that the SEC has labeled securities in lawsuits, including Binance’s BNB, Cardano’s ADA and Polygon’s MATIC falling the most during the course. of the week. The SEC is seeking to freeze assets on Binance.US, which has caused BTC and Ether (ETH) to trade at a significant premium for a period to other platforms, as traders and market makers pull out of the platform.

Crypto traders, spooked by regulatory crackdowns, took their funds en masse from exchanges targeted by the SEC.

Binance, the world’s largest crypto exchange by trading volume, saw a net outflow of $2 billion on the Ethereum blockchain in four days, according to data from Nansen. The metric includes ETH and all Ethereum-based tokens.

BTC withdrawals also exceeded deposits by some $838 million (31,868 BTC) during this period, according to data from Glassnode.

Wednesday’s net outflow of 13,953 BTC was the largest daily decline since last December, when a botched reserve report rattled investor confidence – already fragile after rival Sam Bankman-Fried exchange collapsed. FTX – in the stock market.

While this week’s outflows have been large, they only represent around 5% of all assets on the exchange, according to Binance’s crypto wallets.

Coinbase suffered $1 billion in net outflows through Ethereum from Monday to Thursday, according to Nansen. BTC outflows totaled $25 million, per Glassnode.

Net outflows from Binance.US totaled $75 million on Ethereum, according to data from Nansen. Glassnode does not track the platform.

The U.S.-based exchange said 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 US dollar deposits and will soon remove USD trading pairs, while it temporarily transitions to a crypto-only exchange.

This article was written and edited by CoinDesk journalists for the sole purpose of informing the reader with accurate information. If you click on a Glassnode link, CoinDesk may earn a commission. To find out more, see our Ethics Policy.

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