Binance is experiencing substantial 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).
According to on-chain data provided by the blockchain analytics platform CryptoQuant, the major exchange witnessed a net outflow of 11,380 BTC on the first day following the lawsuit. With bitcoin’s current trading price at $25,739, this amounts to an astonishing $292.9 million in BTC outflows.
CryptoQuant’s data further reveals that the net outflow of ether (ETH) reached 91,223, equivalent to approximately $165.4 million based on current market prices. These significant outflows reflect investors’ efforts to mitigate any potential counterparty risks arising from the SEC’s legal action against Binance.
Interestingly, Nansen, another analytics firm, also confirmed a substantial number of ETH withdrawals, albeit with slightly different figures.
CryptoQuant acknowledges that while the recent surge in withdrawals from Binance is higher compared to the amount recorded after the exchange was sued by the CFTC in mid-March, these outflows are smaller in comparison to certain other notable instances.
The report highlights the period of “regulatory FUD” following the collapse of FTX, during which Binance witnessed net outflows of 40,353 BTC, totaling over $690 million, within a single day. Between December 10 and December 16, 2022, the exchange experienced net outflows amounting to $1.4 billion in BTC. ETH outflows were also substantial during that time.
SEC Lawsuit Sparks Panic Amongst Binance Users
The recent outflows can be attributed to the SEC’s allegations that the exchange and its CEO, Changpeng Zhao, violated several federal securities laws. The lawsuit, filed on Monday, highlighted that Binance’s American counterpart, Binance.US, had conducted the unauthorized sale of unregistered crypto securities, including BNB and BUSD tokens.
In addition to these allegations, the SEC also accused the exchange of mishandling and mixing customer funds, while CZ allegedly maintained control over the US exchange in a secretive manner, despite claiming independence from the American entity.
Although Binance has refuted the SEC’s claims, the lawsuit has already caused renewed panic in the crypto market, resulting in the trading of assets like BNB and other major cryptocurrencies in the red.