Massive Amount Of Crypto Withdrawals Following SEC Lawsuits

Coinbase, one of the leading cryptocurrency exchanges, has witnessed a significant surge in user withdrawals following a lawsuit filed against the platform by the U.S. Securities and Exchange Commission (SEC). The SEC’s action comes just a day after it filed a similar lawsuit against rival exchange Binance.

According to blockchain data provided by Nansen, Coinbase experienced a net outflow of $600 million within a 24-hour period. During this time, traders withdrew a total of $1.38 billion worth of cryptocurrencies from the platform, while deposits amounted to $771 million (excluding Bitcoin transfers).

The surge in withdrawals coincided with the SEC’s lawsuit against Coinbase, accusing the exchange of violating federal securities regulations. Additionally, Coinbase is facing scrutiny from various state regulators who suspect that the platform unlawfully offered staking rewards to users through its “Earn” program.

The data reveals that the outflows from Coinbase occurred in two waves. On Monday, immediately following the lawsuit against Binance, net outflows reached $450 million within an hour before stabilizing. Then, on Tuesday, after the lawsuit was filed against Coinbase, withdrawals increased once again before subsiding. At the time of reporting, net flows for the past hour had turned positive.

Meanwhile, Binance has experienced even larger outflows following the regulatory actions. According to data from 21Shares, net outflows surpassed $700 million on Monday. It marked the largest daily outflow since February when New York state regulators halted the issuance of Binance’s stablecoin, BUSD. The trend continued on Tuesday, with net outflows exceeding $1.2 billion over the past 24 hours, as reported by Nansen.

The magnitude of these outflows aligns with previous significant events in the cryptocurrency industry, such as the crypto banking crisis in March and the collapse of FTX exchange last year. These incidents have shaken investor confidence in centralized exchanges, leading users to withdraw their funds.

The lawsuits filed by the SEC against Coinbase and Binance highlight the growing regulatory pressure on the cryptocurrency industry. It emphasizes the importance of compliance and regulatory adherence for exchanges and other market participants. As the legal proceedings unfold, the industry will closely monitor the outcomes and their implications for the broader crypto landscape.

By Ryan

Ryan is an author at CryptoPresales, With his expertise in the crypto industry, Ryan shares his insights on various aspects of the blockchain ecosystem, including token sales, decentralized finance, and emerging trends.