Investors have taken a whopping $780 MILLION from crypto exchange Binance in the past 24 hours after SEC accused it of mishandling customer funds and ‘redirecting’ them to a separate company owned by founder ‘CZ’
- Binance customers have been pulling their tokens in droves since the Securities and Exchange Commission took legal action
- The SEC has also sued Changpeng Zhao, Binance’s billionaire CEO, in a case alleging a “web of deception” exists to circumvent US laws
- SEC officials followed the lawsuit Tuesday with another against fellow crypto trading platform Coinbase
Investors have withdrawn about $780 million from crypto exchange Binance since it was sued by US regulators who also filed a lawsuit against Coinbase on Tuesday.
Binance customers have been withdrawing their tokens from both the international exchange and its US subsidiary Binance.US in droves since the Securities and Exchange Commission launched legal action against the companies.
The SEC has also sued Changpeng Zhao, Binance’s billionaire CEO, in a case alleging a “web of deception” to circumvent US laws.
SEC officials followed the move with another lawsuit against fellow exchange Coinbase on Tuesday morning, accusing it of operating illegally without first registering with the regulator.
Data company Nansen said Binance saw a net outflow of $778.6 million in crypto tokens and Binance.US recorded a net outflow of $13 million.
Binance customers netted nearly $780 million in 24 hours after the crypto platform was accused by the SEC of using a ‘web of deception’ to circumvent US laws
The Securities and Exchange Commission has charged Binance and its billionaire founder, Changpeng Zhao (pictured), with a ‘web of deception’ to circumvent US laws
Binance is a crypto trading platform that allows users to buy and sell digital assets such as Bitcoin. Regulators claim it operates outside the law through a ‘web of deception’
A similar run on the bank situation preceded the collapse of the FTX exchange run by Sam Bankman-Fried last year, although Binance has repeatedly stated it has the reserves to handle a flood of withdrawals .
The SEC alleged in 13 indictments that Binance artificially inflated its trading volumes, diverted client funds, failed to deter US clients from its platform, and misled investors about its market surveillance controls.
The lawsuit marks the most significant move against a crypto firm by the SEC in its sweeping crackdown on the industry this year.
In statements on Monday, Binance said it had cooperated with the SEC’s investigations and “worked hard to answer their questions and address their concerns,” including trying to reach a negotiated settlement. We intend to vigorously defend our platform.
The lawsuits rocked crypto markets and Bitcoin fell more than five percent on Monday, its worst daily drop since April 19. The world’s largest cryptocurrency was last at $25,723, near its low in more than two months.
“It’s another blow to the crypto industry and the crypto exchanges of the world,” Tony Sycamore, market analyst at IG Markets, said of the SEC case.
Binance’s BNB cryptocurrency, the world’s fourth largest, fell 0.3% to a nearly three-month low of $277 after plunging 9.2% on Monday, its worst daily decline since November.
The SEC complaint is the latest in a string of legal troubles for Binance. The company was sued in March by the US Commodity Futures Trading Commission (CFTC) for running what it said was an “illegal” exchange and “sham” compliance program.
Zhao said the CFTC claims were an “incomplete recitation of facts.”