CFTC Lawsuit Leads to Substantial Crypto Withdrawals from Binance

CFTC Lawsuit Leads to Substantial Crypto Withdrawals from Binance

A substantial amount of cryptocurrency was withdrawn from the global crypto exchange after the US Commodity Futures Trading Commission sued Binance for alleged violations of trading and derivatives rules. Analytics provider Nansen data has revealed USD 400 million were withdrawn in 24 hours from Ethereum-based funds, and Coinglass metrics has revealed that 3,655 bitcoin valued at more than USD 99 million were withdrawn in 24 hours.  

CFTC Sues Binance for Violation of Trading and Derivatives Rules

The US Commodity Futures Trading Commission (CFTC) sued Binance and CEO Changpeng Zhao (CZ), on Monday, March 27, 2023, alleging 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. The lawsuit has led to a large number of withdrawals from Binance, and some observers have noted "large on-chain movements prior" to the troubles with the CFTC.

"A few hours before the Binance CFTC indictment, there were large stablecoin withdrawals across centralized exchanges, totaling almost USD 1.5 billion in 12 hours. Notably, Binance saw a USD 850 million outflow," analysts from ‘An Ape’s Prologue’ explained. "One hour after the announcement, Binance saw an additional USD 240 million withdrawn," the researchers noted.

Nansen and Dune Analytics data reveal more than USD 400 million were withdrawn in 24 hours from Ethereum-based funds. Nansen’s proof-of-reserves portal shows Binance holding USD 63.36 billion worth of cryptocurrency assets. Data also reveal more than 150 million BUSD stablecoins were redeemed on Monday. Currently, 7.84 billion BUSD is in circulation, and 7.1 billion of the tokens are held on Binance. 

3,655 Bitcoin Withdrawn From Binance in 24 Hours

Binance also holds one of the largest caches of bitcoin, as its cold wallet holds 248,597 bitcoin, the single largest address today. Coinglass metrics also indicate that the BTC balance of the Binance exchange has been reduced by 3,655 bitcoin valued at USD 100 million over the last 24 hours, while 1,025 bitcoin were withdrawn from Coinbase during the same time.

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