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The largest cryptocurrency exchange, Binance, is experiencing notable net outflows as numerous crypto traders withdraw their assets from the platform following the recent lawsuit initiated by the United States Securities and Exchange Commission (SEC).
As per on-chain data from the blockchain analytics service CryptoQuant, Binance saw a net outflow of 11,380 BTC on the very first day after the lawsuit was lodged. With bitcoin priced at $25,739 at the time of this report, this amounts to an impressive $292.9 million in BTC withdrawals.
CryptoQuant’s data further indicated that the net outflow of ether (ETH) reached 91,223, which is approximately valued at $165.4 million based on current market rates. These substantial outflows reflect investors’ efforts to mitigate any counterparty risks arising from the SEC’s lawsuit against Binance.
Notably, Nansen also corroborated the increased number of ETH withdrawals, although the specific figures differ slightly.
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CryptoQuant pointed out that while the recent uptick in withdrawals from Binance is comparatively higher than the amounts recorded by the exchange following its lawsuit from the CFTC in mid-March, they are less than some other significant outflows.
The report referenced the period of “regulatory FUD” that followed the downfall of FTX, during which Binance experienced net outflows of 40,353 BTC, exceeding $690 million, in a single day. The exchange also recorded total net outflows of $1.4 billion in BTC between December 10 and December 16, 2022. The ETH outflow was similarly at its peak during that time.
SEC Lawsuit Sparks Panic
The recent outflows are attributed to allegations made by the SEC, asserting that Binance and its CEO, Changpeng Zhao, violated several federal securities laws.
The lawsuit, filed on Monday, highlighted that the exchange’s U.S. affiliate, Binance.US, had participated in the sale of unregistered crypto securities, including BNB and BUSD tokens, without proper authorization.
Among various allegations, the SEC also asserted that the exchange improperly transferred and mixed customer funds and that CZ “secretly” retained control over Binance.US despite claiming it was independent from the American entity.
While Binance has refuted the SEC’s allegations, the lawsuit’s impact has already instilled new panic within the crypto market, with BNB and other major assets trading lower.
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