Binance Faces Massive Crypto Withdrawals Following CFTC Lawsuit

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Binance Faces Massive Crypto Withdrawals Following CFTC Lawsuit

Binance, one of the world's largest cryptocurrency exchanges, has experienced a significant outflow of Bitcoin, Ethereum, and stablecoins following the Commodity Futures Trading Commission's (CFTC) lawsuit against the company. According to data from analytics providers Nansen and Dune Analytics, over $400 million worth of Ethereum-based funds were withdrawn in 24 hours, while 3,655 Bitcoin worth more than $99 million was withdrawn in the past day, according to Coinglass metrics.

On Monday, March 27, 2023, the CFTC sued Binance and its CEO, Changpeng Zhao, alleging that the exchange had violated specific trading and derivatives rules. The CFTC is seeking disgorgement and monetary penalties, as well as a ban on future registrations. Following the announcement, Binance experienced a large number of withdrawals, and some analysts noted "large onchain movements prior" to the exchange's troubles with the CFTC.

According to "An Ape's Prologue" analysts, just hours before the Binance-CFTC indictment, there were large stablecoin withdrawals across centralized exchanges, totaling nearly $1.5 billion in just 12 hours. Binance itself saw an $850 million outflow, and one hour after the announcement, an additional $240 million was withdrawn. Statistics also show that more than 150 million BUSD stablecoins were redeemed on Monday, and 7.1 billion of those tokens are held on Binance.

Binance's cold wallet holds 248,597 Bitcoin, the largest address today, according to Coinglass. Binance's BTC balance indicates that the exchange has shed 3,655 Bitcoin worth nearly $100 million over the last day. While Binance saw the most Bitcoin outflow over the past 24 hours, Coinglass records indicate that 1,025 Bitcoin was withdrawn from Coinbase.

The CFTC's lawsuit is a significant blow to Binance, which has faced regulatory scrutiny in several countries in recent months. The company has been banned from operating in the United Kingdom and has been warned by regulators in Japan, Germany, and other countries. Binance's troubles highlight the challenges faced by cryptocurrency exchanges in navigating an increasingly complex regulatory environment.

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