Crypto exchange Binance is in hot water as the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against the company and its founder, Changpeng “CZ” Zhao, over allegations of violating federal securities laws.
This development has triggered a significant reaction from the market, with data from Nansen.ai showing that outflows from Binance across all protocols reached $719 million over a 24-hour period.
Just during U.S. trading hours, net outflows from Binance amounted to $230 million following the SEC’s announcement of the legal action.
Interestingly, despite the massive outflow, Binance’s stablecoin balance remains robust at just over $8 billion, with a seven-day outflow of $519 million, equivalent to approximately 6% of its total holdings.
Comparatively, OKX, the exchange with the next largest stablecoin holdings, reports a balance of $4 billion.
It’s also noteworthy that the outflows are within historical norms according to Seoul-based crypto analytics firm, CryptoQuant.
The market reaction to the lawsuit isn’t entirely negative. As shared on Twitter by LookOnChain, a leading blockchain analytics platform, some institutional investors and whales seem to be buying from the bottom.
1/ Affected by the #SEC suing #Binance, there is a lot of #FUD in the market.
However, we have noticed that some institutions, whales, and SmartMoney seem to be buying from the bottom.
👇— Lookonchain (@lookonchain) June 6, 2023
Cumberland, a leading global liquidity provider in the crypto asset space, withdrew 67.9M USDC from Circle and deposited 67.1M USDC to Coinbase.
FalconX, a digital assets trading platform, also transferred a substantial amount of USDC from Circle to Binance.
Meanwhile, FBG Capital, a digital asset management firm, took a bold step by withdrawing 35M USDT from Binance and 9M USDT from OKX, before the SEC news broke, only to deposit all 44M USDT back to Binance after the news surfaced.
Another smart investor known for buying low and selling high deposited 15.9M USDT into Binance and withdrew 8,800 ETH, at an average buying price of approximately $1,808.
It is evident that while the lawsuit has caused significant withdrawals from Binance, the exchange’s stablecoin balance remains healthy, suggesting that the platform remains resilient amidst the controversy.
In addition, some major players in the crypto market appear to be taking advantage of the situation to invest more wisely, a sign that the crypto market can often see opportunities even in times of crisis.
