In a whirlwind of regulatory actions, Coinbase, the renowned cryptocurrency exchange, found itself at the center of an SEC lawsuit, triggering a wave of user withdrawals.
The SEC’s legal action against Coinbase came hot on the heels of a lawsuit filed against rival exchange Binance.
Blockchain data from Nansen revealed that within a 24-hour period, Coinbase experienced net outflows totaling $600 million, while traders withdrew a staggering $1.38 billion in cryptocurrencies during the same timeframe, with $771 million in deposits recorded.
Coinbase Faces SEC Lawsuit and State Regulatory Scrutiny
The SEC, as the primary securities regulator in the United States, accused Coinbase of violating federal securities regulations, adding to its ongoing legal battles with Binance.US and Binance.
The lawsuits against both exchanges prompted a surge of user withdrawals from Coinbase. Additionally, numerous U.S. state regulators have raised concerns that Coinbase may have breached the law by offering staking rewards to users in its “Earn” program.
Withdrawal Patterns and Trading Activity
Data indicates that Coinbase witnessed two significant waves of user withdrawals. On Monday, shortly after the lawsuit against Binance was announced, net outflows from Coinbase spiked to $450 million within a single hour, according to Nansen data.
The situation then stabilized before withdrawals surged once again on Tuesday following the SEC’s lawsuit against Coinbase. However, as of the time of publication, net flows for the past hour had turned positive.
Binance Faces Even Larger Withdrawals
The regulatory actions against Binance resulted in even larger outflows from the exchange. On Monday, net outflows from Binance surpassed $700 million, marking the largest daily outflow since February, when New York state regulators halted the issuance of the Binance-related stablecoin BUSD.
The trend continued on Tuesday, with Nansen data revealing net outflows exceeding $1.2 billion over the past 24 hours.
