Binance Users Pull $778 Million Amid SEC Crackdown

Binance customers withdrew over $778 million amid SEC legal action against the cryptocurrency platform.

That’s according to findings by data firm Nansen Tuesday (June 6), one day after the U.S. Securities and Exchange Commission (SEC) charged Binance and its founder with 13 counts of securities law violations.

“Netflow to Binance over the past 24 hours is $778.6M negative on Ethereum — $871.7M in and $1.65B out,” Nansen wrote on Twitter early Tuesday morning.

The situation was similar for Binance.US — which Binance insists is an independent business — where investors deposited $11.5 million but withdrew $24.5 million. 

PYMNTS contacted Binance, which said that “Higher than normal outflows are expected when news like this comes out. Outflows appear to have now stablized. Because user funds are held 1:1, all withdrawals were met, as normal, without us breaking stride.”

Among the allegations in the SEC’s suit is the claim that Binance founder and CEO Changpeng Zhao and his company allow American customers to trade on its platform while publicly insisting U.S. customers are restricted.

The SEC also accused Binance and Zhao of controlling Biannce.US while maintaining it as a separate entity and of controlling assets of both platforms’ customers and commingling or diverting those assets.

“We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk — all in an effort to maximize their own profits,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a news release.

Binance responded by saying all user assets on the two platforms are “safe and secure,” that the SEC has refused to offer up guidance and clarity to the crypto sector, and that “regulation by enforcement” is not the way to craft an effective regulatory framework.

The “regulation by enforcement” argument was also employed Tuesday by Coinbase after it was sued by the SEC.

The SEC’s suit alleges that Coinbase’s business “intertwines the traditional services of an exchange, broker, and clearing agency” without registering those functions with the commission, as required by federal law.

By doing so, the complaint says, Coinbase has denied investors “significant protections,” such as SEC inspections, recordkeeping requirements, and safeguards against conflicts of interest.

On Tuesday morning, after 24 hours of tweeting and retweeting claims that the SEC’s actions were an attack on the crypto industry, Zhao offered up this statement on Twitter: “If you have to pick a fight with everyone, maybe you are the one at fault.”