Amid the recent legal action taken by the SEC against Binance and its CEO Changpeng Zhao, cryptocurrency traders are swiftly withdrawing their funds from the crypto exchange.
Blockchain data analyzed by Nansen, a leading blockchain intelligence platform, reveals that Binance experienced a significant net outflows as traders and investors cut counterparty risk after the U.S. Securities and Exchange Commission (SEC) announced lawsuits against the exchange and its CEO.
Recent rush of withdrawals
According to Nansen, traders on Binance withdrew a total of $125 million in digital assets within a one-hour period, while the platform received only $56 million in deposits during the same time frame. These figures indicate a significant net outflow of funds from the exchange during that hour.
The recent rush of withdrawals from Binance appears to be relatively smaller compared to the significant outflows witnessed in February following regulatory actions against New York-based BUSD issuer Paxos by the New York Department of Financial Services and a Wells Notice issued to Binance by the SEC.
During that period, Binance processed over $2 billion worth of BUSD outflows, indicating a much larger scale of movement compared to the current situation.
This news has elicited different responses from the community, with many “curious of the outflows” that they will see while others such as @0x85_me sharing that in recent months, Binance has witnessed a consistent outflow of funds.
Lawsuits in early stages
This increase in withdrawals comes following the SEC’s legal action against Binance with a total of 13 charges being filed.
The SEC’s lawsuit, filed in the U.S. District Court for the District of Columbia, is making the allegation that Zhao and Binance engaged in deceptive practices by providing false information to investors regarding the exchange’s ability to detect market manipulation.
At the same time, the SEC is also accusing Binance of operating an unregistered trading platform in the United States, allowing U.S. customers to trade cryptocurrencies on an exchange that is not authorized for U.S. investors.
The case will shed light on the regulatory landscape surrounding cryptocurrencies and their classification as “securities.”