SEC’s lawsuits against the leading cryptocurrency exchanges have triggered massive withdrawals.
"It's been 24 hours since the SEC sued Binance. Binance users have withdrawn over $3B across multiple chains since the announcement, resulting in $1.43B negative netflow as of 3 pm UTC today," on-chain research firm Nansen reported yesterday. Nansen’s experts explain that "At a very high level, negative netflow (the sum of what's been deposited into Binance and what's been withdrawn), means that Binance users are withdrawing more than what they're depositing into the exchange."
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Nansen also added that for Binance the large withdrawals are not new as it experienced a similar situation in December 2022. Back then, Binance users concerned about the exchange’s insolvency withdrew more than $2 billion. Still, the Web3 research company reports that Binance holds at least $71 billion in the wallets known to Nansen.
In the meantime, Coinbase also was sued by the SEC. The recent statistics from Nansen shows that the negative netflows for this exchange have reached almost $1.3 billion while Brevan Howard Digital and Cumberland, leading institutional investors, have withdrawn the largest amount of funds from the platform.
Nansen believes "the lawsuit news might be partially in the price," as the SEC signaled the investigation of the two leading crypto exchanges already at the beginning of 2023.
Read also: SEC claims all Ethereum transactions fall under the US purview
Coinbase was charged right after Binance. As per the SEC’s complaint, "Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities," while this company "intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law."
The press release on the official SEC’s website cites the Commission’s chair Gary Gensler, who said that "Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC."
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, commented on the lawsuit, "You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great."
