SEC lawsuits against Binance, Binance.US, and Coinbase have prompted the departure of approximately $4 billion in deposits from these prominent cryptocurrency exchanges.
SEC lawsuits against Binance Binance.US and Coinbase have spurred the exodus of $4 billion of deposits
According to blockchain data, the lawsuits filed by the U.S. Securities and Exchange Commission (SEC) against Binance, Binance.US, and Coinbase have resulted in a significant outflow of approximately $4 billion in deposits from these major cryptocurrency exchanges.
Between Monday and Thursday, the three exchanges experienced a combined net outflow of $3.1 billion through the Ethereum network and $864 million in bitcoin (BTC), indicating that withdrawals exceeded incoming deposits. However, despite the regulatory challenges, the exchanges managed to process withdrawals in an organized manner throughout the week.
The SEC initially filed a lawsuit on Monday against Binance, Binance.US, and their CEO Changpeng “CZ” Zhao, alleging various violations of federal securities laws. Subsequently, on Tuesday, the agency sued Coinbase for offering unregistered securities to the public.
These actions had a disruptive effect on the cryptocurrency market, particularly impacting tokens categorized as securities in the lawsuits, such as Binance’s BNB, Cardano’s ADA, and Polygon’s MATIC, which experienced significant declines during the week.
The SEC’s attempt to freeze assets on Binance.US led to BTC and ETH trading at a notable premium for a period compared to other platforms, causing traders and market makers to retreat from the platform.
As a result of the SEC’s regulatory actions, crypto traders withdrew their funds from the affected exchanges on a large scale. Binance, the world’s largest crypto exchange by trading volume, saw a net outflow of $2 billion on the Ethereum blockchain over a four-day period, including ETH and all Ethereum-based tokens, as reported by Nansen data.
Additionally, BTC withdrawals outpaced deposits by approximately $838 million (31,868 BTC) during the same timeframe, according to Glassnode data. Wednesday witnessed the largest daily outflow of 13,953 BTC since last December, when an erroneous reserve report eroded investor confidence in the exchange, already weakened by the collapse of rival exchange FTX led by Sam Bankman-Fried.
While the outflows this week were significant, they represent only about 5% of all assets held on the exchange, according to Binance’s crypto wallets.
Similarly, Coinbase experienced net outflows of $1 billion via Ethereum and $25 million in BTC between Monday and Thursday. Binance.US recorded net outflows of $75 million on Ethereum, according to Nansen data, although Glassnode does not track this specific platform.
In response to the SEC’s actions, the U.S.-based exchange, Binance.US, advised its users to withdraw USD funds promptly due to the regulatory pressure. The platform suspended USD deposits and plans to delist USD trading pairs in the near future while temporarily transitioning to a crypto-only exchange.
This decision comes as a result of what the company describes as the SEC’s “extremely aggressive and intimidating tactics” against them.
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