Last Updated on June 7, 2023 by COINBUZZFEED
Cryptocurrency traders worldwide are witnessing a surge in fund withdrawals from Binance, the leading cryptocurrency exchange. This recent spike in withdrawals reminds many of the banking crisis that occurred in March. The catalyst behind this surge is the legal action taken by the U.S. Securities and Exchange Commission (SEC) against Binance and its CEO, Changpeng “CZ” Zhao. The SEC has accused them of violating federal securities laws, creating a sense of uncertainty among traders and investors.
Unprecedented Outflows
Data analysis reveals that Binance encountered a staggering net outflow of $503 million on the day the SEC lawsuit was announced. This substantial volume of withdrawals is expected to mark the largest daily net outflow since the crisis in March. Within just one hour of the news breaking about the lawsuit, Binance witnessed a significant surge in outflows, surpassing the inflow of deposits.
The Past and the Present
Binance has faced similar situations in the past, notably when regulators in New York targeted Binance-related stablecoin BUSD, resulting in approximately $830 million in net outflows over a 24-hour period. However, the current level of withdrawals indicates a heightened level of concern among traders, showcasing the potential implications of the SEC’s actions.
Impact on Binance’s Reserves
Binance’s impressive crypto wallets hold approximately $55 billion worth of digital assets, according to Nansen’s exchange reserve data. This significant reserve highlights the trust and confidence cryptocurrency investors have placed in Binance. Nevertheless, the recent lawsuit raises questions about the future of these reserves and the potential impact on Binance’s operations.
