Binance saw a loss of over $778 million in Ethereum-based tokens within a day after SEC charges, indicating more Ethereum-based tokens were withdrawn than deposited, according to Nansen, a crypto analysis company.
The data shows that Binance had $871 million in inflows but $1.6 billion in outflows on the Ethereum network. In the past hour alone, the exchange lost $50.5 million worth of Ethereum-based assets while only gaining $14.8 million.
The SEC’s lawsuit also affected Binance’s reserve assets, the funds the exchange holds to facilitate trading and liquidity. As soon as news broke of the lawsuit, Binance’s reserve funds plummeted by $1.4 billion or 2.6% of their total reserves worth $52.9 billion.
While Binance is losing customers and funds, another crypto exchange benefits from the situation. OKX, a rival platform, saw a significant inflow of over $190 million in the past 24 hours as traders moved their funds from Binance to OKX.
Binance has a history of encountering regulatory issues and customer dissatisfaction. The Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance in March 2021, accusing the exchange of providing illicit derivatives trading to US customers.
In Dec 2022, Binance saw significant withdrawals following the FTX failure and the ensuing market plunge and liquidity crunch. Despite this, its stablecoin balance exceeds $8 billion, showing its resilience to market fluctuations and legal scrutiny.
Bitcoin Outflows Also Spike On Binance
A large number of assets are leaving Binance, not just Ethereum. Recent reports show that the exchange experienced a massive outflow of over 20,000 BTC within 24 hours, marking the largest withdrawal since the FTX collapse.
CryptoQuant, a company specializing in blockchain transaction analysis, noted a considerable surge in the number of users taking out their money after the news of a legal challenge by the SEC was made public.
However, despite this surge, the number of withdrawals didn’t exceed the high levels witnessed in December 2022. Back then, investors favored self-custody or maintaining personal control over their crypto assets.
The increase in users pulling out their investments from Binance indicates decreasing confidence in centralized trading platforms. This decline is often due to these platforms’ vulnerability to regulatory checks and security threats.
Many individuals interested in cryptocurrency prefer keeping their assets in personal wallets or using decentralized systems, which provide higher levels of independence and privacy.
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Ethereum stands out as a major player in the world of decentralized, giving users greater control over their transactions. As such, Ethereum may rise with the increasing demand for decentralized crypto solutions.