A considerable amount of money has been withdrawn by investors from the prominent cryptocurrency exchange Binance. This occurred following the Securities and Exchange Commission’s (SEC) allegation of several violations against the company and its founder. Net outflows from Binance and its US branch have hit $791 million, according to crypto research firm Nansen.
According to the SEC’s charges, Binance participated in the unregistered offer and sale of securities. It also accused the corporation of improperly combining investors and its own funds. They apparently also permitted US investors to use its international exchange rather than the separate US version. Similar allegations had previously been used and filed against Binance by the Commodity Futures Trading Commission (CFTC).
Investors withdrew $791 million from Binance within 24 hours in response to the claims. This comes after Binance predicted huge asset inflows following the bankruptcy of another cryptocurrency exchange, FTX. However, Binance’s new charges appear to have undermined some of its profits.
🚨 Investor withdrawals surge high as SEC charges the crypto exchange #Binance! 💰
— Walletor (@walletorapp) June 6, 2023
On the Ethereum blockchain, investors extracted $1.65 billion in assets from Binance and $13 million from Binane’s US subsidiary. In contrast, inflows were significantly lower than they were previously.
Changpeng Zhao, along with Binance’s two businesses, strenuously denies the SEC’s charges. It remains to be seen how the legal processes will play out and how they would affect Binance’s operations and image.
The allegations against the crypto exchange illustrate the increased attention that regulators are putting on the cryptocurrency industry. As investors become increasingly cautious, it is critical for crypto exchanges to secure regulatory compliance while also establishing confidence with their user base.
Finally, the SEC’s allegations against Binance and its founder have resulted in substantial investor withdrawals from the exchange. This serves as a reminder of the bitcoin market’s reliance on regulatory compliance. It also raises concerns about Binance’s future in light of ongoing legal actions.