Crypto investors have reportedly raced to pull out funds from Binance’s U.S. arm in the last 24 hours, as the sum pulled out hits $791 million after SEC filed 13 charges against Binance.
Investors have reportedly withdrawn $1.65 billion worth of assets from Binance and $13 million from contested Binance’s U.S arm on the Ethereum blockchain after the charges were unveiled. Inflows totaled only $871.8 million and $11.53 million to Binance and Binance.US, respectively.
Recall that the Securities and Exchange Commission (SEC) on Monday had alleged in 13 charges that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict US customers from its platform, and misled investors about its market surveillance controls.
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SEC alleged that Binance’s blatant disregard of the federal law enriched themselves by billions of US dollars while placing investors’ assets at significant risk.
Binance in a response to the SEC on Monday stated that there is “zero justification” for the lawsuit, that the SEC is trying “to claim jurisdictional ground from other regulators,” and that “any allegations that user assets on the Binance.US platform have ever been at risk are simply wrong.”
Binance further stated that all user assets on its platform and Binance affiliate platforms, including Binance.US, are safe and secure, noting that the company will vigorously defend against any allegations to the contrary.
Following SEC charges Binance Bitcoin steadied after falling more than 5 percent yesterday, its worst daily decline since April 19. The world’s biggest cryptocurrency was last at $25,723, flat on the day but pinned near a more than two-month low.
Binance’s BB cryptocurrency, the world’s fourth-largest, fell 0,3 percent to a near three-month low of $277, after a 9.2 percent plunge on Monday, its worst daily fall since November.
Also, the biggest cryptos all fell following the charges levied against the crypto exchange. Bitcoin dropped by 5.9% on Monday, its largest single-day decline since March. Ethereum fell by 5.2% yesterday, its biggest one-day drop since April.
The suit also labeled certain tokens as securities that were traded on Binance’s platforms, prompting a slump in the prices of these tokens which include, Solana, Cardano, Polygon, Filecoin, Cosmos, Sandbox, Decentraland, Algorand, Axie, Infinity and COTI.
Also, with the above-listed tokens now designated as “unregistered securities”, it suggests that these assets now fall under the SEC’s remit, which means these assets are required to follow stricter rules. All this could make exchanges less eager to list such tokens for trading on their platforms, lest they run afoul of the SEC’s rules.
The lawsuit, which cited several practices, first marks the most significant step against a crypto company by the SEC in its sweeping crackdown on the industry this year.
This is the latest legal battle facing Binance, after it was sued by the CFTC (Commodity Futures Trading Commission) back in March, which also claimed that Binance had been evading regulators, as claimed overnight by the SEC.
Market analysts state that this is another blow to the crypto industry and the crypto exchanges of the world. It remains to be seen whether crypto loyalists as well as major industry players can overcome the tightening regulatory controls. For now, analysts disclose that the fact that Bitcoin prices haven’t plummeted, and is holding steady despite reaching their lowest levels since March, portends the underlying faith and support for crypto.