The world’s largest crypto exchange, Binance, has experienced significant net outflows as numerous crypto traders withdraw their funds from the platform following the latest lawsuit from the United States Securities and Exchange Commission (SEC).
According to on-chain data from the blockchain analytics platform, CryptoQuant, Binance recorded a net outflow of 11,380 BTC on the first day after the lawsuit was filed, which translates to approximately $292.9 million in BTC outflows based on bitcoin’s current market price of $25,739.
The CryptoQuant data also revealed that the net outflow on ether (ETH) had reached 91,223, which is worth about $165.4 million in the current market. These significant outflows aim to avoid counterparty risks resulting from the SEC lawsuit against Binance.
Interestingly, Nansen also confirmed the high number of ETH withdrawals, but with slightly different figures.
Netflow to Binance over the past 24 hours is $778.6M negative on Ethereum – $871.7M in and $1.65B out
Over the past hour, netflow on Ethereum continues to be negative at $35.7M on Ethereum – $14.8M in and $50.5M out
Track it here and filter for “Binance” pic.twitter.com/jnNAN0QKVy
— Nansen 🧭 (@nansen_ai) June 6, 2023
Not The Worst
CryptoQuant noted, however, that while the recent surge in withdrawals from Binance is relatively higher than the amount recorded by the exchange after it was sued by the CFTC in mid-March, it is smaller than some other significant outflows.
The report referenced the period of “regulatory FUD” following the collapse of FTX, where Binance recorded net outflows of 40,353 BTC, worth over $690 million, in one day. The exchange saw net outflows totaling $1.4 billion in BTC between December 10 and December 16, 2022, with the ETH outflow also reaching its peak at the time.
SEC Lawsuit Sparks Panic
The recent outflows resulted from allegations made by the SEC that Binance and its executive, Changpeng Zhao, have violated several federal securities laws.
The lawsuit, filed on Monday, alleges that Binance’s American affiliate, Binance.US, participated in selling unregistered crypto securities, including BNB and BUSD tokens, without any authorization.
Among other allegations, the SEC claims that the exchange mistakenly moved and combined customer funds, and CZ “secretly” retained control over Binance.US, despite claiming to be independent of the American entity.
While Binance has denied the SEC’s claims, the lawsuit has already sparked fresh panic in the crypto market, with BNB and other major assets trading in the red.