Binance and Coinbase Lose Nearly $1 Billion in Crypto Reserves After SEC Lawsuits

The crypto market has witnessed a massive exodus of bitcoin and ethereum from exchanges in the last seven days, following the SEC lawsuits against Binance and Coinbase. According to data from cryptoquant.com, nearly $1 billion worth of ETH and BTC has been moved out of centralized platforms since June 4, 2023. This indicates a growing distrust and uncertainty among crypto investors regarding the regulatory environment in the U.S.

Binance and Coinbase are two of the largest and most popular crypto exchanges in the world, with millions of users and billions of dollars in daily trading volume. However, both of them have faced legal challenges from the U.S. Securities and Exchange Commission (SEC), which accuses them of violating securities laws by offering unregistered products and services to U.S. customers.

The SEC filed a lawsuit against Binance on June 5, 2023, alleging that the exchange has been operating as an unregistered securities exchange and facilitating illegal transactions involving securities, commodities, and digital assets. The SEC also claims that Binance has failed to comply with anti-money laundering and investor protection rules.

The next day, the SEC sued Coinbase for similar reasons, claiming that the exchange has been offering a lending program called Coinbase Lend without registering it as a security. The SEC also alleges that Coinbase has misled investors about the risks and returns of the program, which promises to pay 4% interest on stablecoins.

These lawsuits have sparked a wave of fear and panic among crypto investors, who have decided to withdraw their funds from exchanges and move them to safer places, such as cold wallets or decentralized platforms. Data from cryptoquant.com shows that 22,263 BTC and 241,366 ETH have been withdrawn from exchanges since June 4, 2023, reducing the exchange reserves by 1% and 1.5%, respectively.

However, not all exchanges have experienced the same level of outflows. While Binance has seen a record amount of withdrawals, with 40,427 BTC leaving the platform in the last week, some other exchanges have actually seen inflows of bitcoin and ethereum. For instance, Coinbase has added 2,959 BTC to its reserves in the same period, while Okx has gained 3,772 BTC.

This suggests that some investors are switching between exchanges, looking for more reliable and compliant platforms to trade their crypto assets. It also indicates that some exchanges are better prepared than others to deal with regulatory scrutiny and potential enforcement actions.

The SEC lawsuits against Binance and Coinbase have sent a clear message to the crypto industry: the regulator is serious about cracking down on unregistered and illegal activities involving digital assets. The crypto market has reacted with caution and concern, as investors seek to protect their funds from possible seizure or loss. However, the market has also shown resilience and optimism, as bitcoin and ethereum prices have recovered from the initial drop and rallied above $27K and $1.7K respectively.