Unprecedented outflows following US lawsuit
Renowned cryptocurrency exchange Binance has experienced a massive $2.2 billion in withdrawals following news of a US lawsuit filed by the Commodity Futures Trading Commission (CFTC). This significant outflow is putting the exchange under the spotlight as customers are reacting to the news.
CFTC accuses Binance of offering unregistered securities
The CFTC filed a lawsuit on Monday, alleging that Binance has been offering “unregistered securities” to retail investors in the United States. As a result, concerned customers have been withdrawing their assets from the platform at an accelerated pace.
Ethereum outflows reach $2.2 billion
According to the Wall Street Journal, Ethereum tracking platform Nansen reported that, in the past seven days, Binance has seen a net outflow of $2.2 billion on the Ethereum network alone. This figure excludes withdrawals on other networks such as Bitcoin, Tron, and Binance’s own BNB Chain.
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Massive outflows from publicly known wallets
The enormous outflow has impacted Binance’s total holdings in publicly known wallets, previously valued at approximately $63.2 billion. Nansen analyst Andrew Thurman commented on the withdrawal levels, stating that the activity is “heightened compared to normal activity” and intensified after the CFTC announcement.
Binance’s challenges: regulatory actions and trading fees
Binance has recently faced several hurdles, including regulatory actions affecting the Binance USD (BUSD) stablecoin and the reintroduction of trading fees on bitcoin pairs. The latter could be a reason behind both the withdrawals and the decrease in trading volumes observed on the platform recently.
Trading fees: an essential factor in the crypto space
John Quarnstrom, a portfolio manager at crypto hedge fund Iceberg Capital, highlighted the importance of fees in the cryptocurrency space. He said
Generally I’ll make a decision to trade on an exchange first and foremost on its custodial aspect; the second is the fees for sure.
Binance reassures customers on withdrawal requests
In response to concerns about Binance’s ability to honor all withdrawal requests, a spokeswoman for the exchange assured the public that there is no cause for concern. She stated, “[We have] more than enough funds to fulfill withdrawal requests.”
Key Facts
What triggered the $2.2 billion outflow from Binance?
The CFTC’s lawsuit alleging Binance of offering unregistered securities to US retail investors prompted customers to withdraw their assets from the exchange, leading to the massive outflow.
How does the reintroduction of trading fees affect Binance?
The return of trading fees on bitcoin pairs could be a reason behind the withdrawals and the decrease in trading volumes observed on the platform recently.
Can Binance fulfill all the withdrawal requests?
Yes, a spokeswoman for Binance has stated that the exchange has more than enough funds to fulfill all withdrawal requests from customers.
