SEC Lawsuits Trigger Four Billion Dollar Deposit Exodus from Binance, Coinbase, and Binance.US

Lawsuits from the U.S. Securities and Exchange Commission (SEC) against Binance, Binance.US, and Coinbase have triggered an exodus of approximately four billion dollars in deposits from the aforementioned cryptocurrency exchanges, according to blockchain data.

The three exchanges suffered a combined net outflow of 3.1 billion dollars via the Ethereum network and 864 million dollars in Bitcoin between Monday and Thursday, data from analytics firms Nansen and Glassnode show. The net outflow means that withdrawals exceeded incoming deposits.

The exchanges processed withdrawals smoothly throughout the week.

On Monday, the SEC filed a lawsuit against Binance for the first time, along with its U.S. subsidiary Binance.US and CEO Changpeng ‘CZ’ Zhao, for a series of violations of federal securities laws. The agency then sued Coinbase on Tuesday for offering unregistered securities to the public.

The actions unsettled the crypto market, and cryptocurrencies that the SEC classified as securities, including Binance Coin, Cardano, Solana, and Polygon, experienced the largest declines. The SEC is seeking to freeze assets on Binance.US, causing Bitcoin and Ethereum to trade at a significant premium compared to other platforms for a time, as traders and market makers withdraw from the platform.

Crypto traders, frightened by regulatory measures, massively withdrew their funds from the exchanges targeted by the SEC.

Binance, the world’s largest cryptocurrency exchange by trading volume, experienced a net outflow of 2 billion dollars on the Ethereum blockchain over four days, according to Nansen’s data. The metric includes Ethereum and all Ethereum-based tokens.

Bitcoin withdrawals also exceeded deposits by about 838 million dollars during that period, according to Glassnode data.

A net outflow of 13,953 Bitcoins on Wednesday was the largest daily withdrawal since last December, when investor confidence had already been shaken after the collapse of FTX’s Sam Bankman-Fried.

Although last week’s outflows were significant, they represent only about 5 percent of all assets on the exchange, according to Binance’s crypto wallets.

Coinbase suffered a net outflow of one billion dollars via Ethereum from Monday to Thursday, according to Nansen. Bitcoin outflows amounted to 25 million dollars, according to Glassnode.

Binance.US net outflows totaled 75 million dollars on Ethereum, Nansen’s data shows. Glassnode does not track the platform.

The U.S. subsidiary of Binance stated on Friday that users should withdraw dollars as soon as possible following the ‘extremely aggressive and intimidating tactics’ of the SEC against the company. The platform has suspended deposits in U.S. dollars and will soon remove trading pairs in dollars while temporarily transitioning to a crypto-only exchange.