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Blockchain data reveals that the U.S. Securities and Exchange Commission's (SEC) lawsuits targeting Binance, Binance.US, and Coinbase have prompted a staggering $4 billion worth of deposits to flee from these crypto exchange giants.
Data provided by blockchain analytics firms Nansen and Glassnode reveals that over the course of Monday to Thursday, there was a significant combined net outflow of $3.1 billion through the Ethereum network and an additional $864 million in bitcoin (BTC) withdrawals. This indicates that the amount withdrawn exceeded the deposits made during this period.
The exchanges smoothly facilitated withdrawals throughout the week.
On Monday, the Securities and Exchange Commission (SEC) initiated legal action against Binance, its U.S.-based counterpart Binance.US, and their CEO Changpeng "CZ" Zhao, citing numerous violations of federal securities laws. The following day, the SEC filed a lawsuit against Coinbase, accusing the company of providing unregistered securities to the general public.
The legal actions taken by the SEC created a sense of unease in the cryptocurrency market, particularly impacting tokens that were identified as securities in the lawsuits. Among the most affected during the week were Binance's BNB, Cardano's ADA, and Polygon's MATIC. The SEC's intention to freeze assets on Binance.US led to a notable premium in the trading of BTC and ether (ETH) compared to other platforms, as traders and market makers opted to distance themselves from the platform.
Fearing the regulatory crackdown, crypto traders swiftly withdrew their funds from the exchanges that were being targeted by the SEC, causing a mass exodus.
Nansen data reveals that Binance, the world's foremost cryptocurrency exchange in terms of trading volume, encountered a noteworthy outflow of $2 billion across the Ethereum blockchain over a four-day period. This metric encompasses not only ETH but also all Ethereum-based tokens.
Glassnode data reveals that BTC withdrawals surpassed deposits by an impressive $838 million (equivalent to 31,868 BTC) during this period.
Wednesday witnessed the largest daily net outflow of 13,953 BTC since December of the previous year. This notable drawdown occurred following a flawed reserve report that severely impacted investor confidence. The exchange had already experienced a decline in trust due to the collapse of FTX, the rival exchange of Sam Bankman-Fried.
Although the outflows observed this week were noteworthy, Binance's crypto wallets indicate that they account for approximately 5% of all assets held on the exchange.
Nansen's report indicates that Coinbase faced a substantial outflow of $1 billion in Ethereum from Monday to Thursday. Additionally, Glassnode's data reveals that during the same timeframe, Bitcoin outflows from Coinbase reached a total of $25 million.
Nansen data reveals that Binance.US witnessed a significant outflow of $75 million on the Ethereum network. It's important to note that Glassnode does not track transactions on this platform.
On Friday, the U.S.-based exchange urged its users to promptly withdraw USD funds due to the Securities and Exchange Commission's (SEC) implementation of "extremely aggressive and intimidating tactics" against the company. In response, the platform has temporarily halted U.S. dollar deposits and plans to remove USD trading pairs in the near future. During this transitional period, the exchange will solely operate as a crypto-only platform.
