SEC Lawsuit Triggers Massive Outflows from Binance

The United States Securities and Exchange Commission’s (SEC) litigation against Binance, which accuses the cryptocurrency exchange of violating numerous securities laws, has directly impacted the cryptocurrency market and the exchange’s financial standing.

According to data from crypto-analytics firm Nansen, Binance experienced negative netflows of over $778 million on the Ethereum blockchain, with outflows of $1.6 billion dominating inflows of $871 million.

In the 24 hours since the SEC allegations, Ethereum-based tokens have experienced negative netflows, with $14.8 million worth of assets entering the exchange and $50.5 million leaving the business in the past hour.

In the first hour following the announcement of the SEC’s accusations, Binance’s reserve assets experienced a net outflow of approximately $1.4 billion, or 2.6% of its total reserve assets of $52.9 billion.

In the past 24 hours, the total outflow of funds from Binance across all protocols has reached $999 million.

Deteriorating confidence in Binance, on the other hand, has enabled OKX to become a preferred destination for traders, with the exchange recording a significant inflow of more than $190 million.

Compared to the lawsuit filed by the Commodity Futures Trading Commission against Binance in March, the recent net outflow is significant but more minor.

The same holds true for December 2022, when Binance experienced significant outflows following the FTX collapse.

In addition, the net outflows remain below the exchange’s reserve. The cryptocurrency exchange has a stablecoin balance of more than $8 billion.

In addition to Ethereum outflows, Binance experienced the largest Bitcoin outflow since the FTX collapse. In the past 24 hours, over 20,000 BTC have been withdrawn from the exchange.

Another on-chain analysis shared by CryptoQuant revealed that after the SEC litigation announcement, the total number of user withdrawal transactions spiked.

However, they had not yet surpassed the levels seen in December 2022, when self-custody in the cryptocurrency market became increasingly prevalent.

The considerable increase in the withdrawal of assets from the cryptocurrency exchange, according to market analysts, reflects investors’ declining confidence in centralized exchanges.