Crypto giant Binance sees $1.6 billion in crypto withdrawals after CFTC lawsuit

The US CFTC has sued the crypto giant and its CEO and former top compliance officer, alleging they operated an “illegal” exchange and a “fictitious” compliance program.

Following the CFTC lawsuit, Binance saw $1.6 billion in global withdrawals and $852 million in the past 24 hours, according to blockchain data tracker Nansen, up from the $385 million average. dollars a day for the past two weeks.

Nansen research analyst Martin Lee said outflows were higher than usual, but still not as high as Dec. 13, when investors withdrew $3 billion from Binance as they grew nervous about the state of Binance’s reserves.

“The crypto market capitalization has increased by 2.56% and currently stands at $1.16 trillion, with BTC and ETH leading the effort. The CFTC focused on Ethereum by showing its support for ETH as a commodity, which led to a mini-rally of 3.92% in just 24 hours.BTC is up slightly by 1.54% and is trading at $27,371.52 as of At the time of writing, investors are closely watching Binance developments related to CFTC action,” said BuyUcoin CEO Shivam Thakral.

“Unexpected and disappointing”

Binance called the CFTC lawsuit “unexpected and disappointing.” The crypto platform said it had worked with the regulator for more than two years, had strengthened compliance staff and would continue to work with authorities in the United States and elsewhere.

According to the CFTC, an unidentified US company used a subsidiary in the Cayman Islands to trade on Binance. Another traded on Binance by entering into a “services agreement” with an ostensibly unrelated entity organized under the law of Jersey, a British dependency. A third began trading through a Singapore subsidiary, then moved to an entity also incorporated in the Cayman Islands, according to the complaint filed in federal court on Monday.

Binance also ordered some US customers to use virtual private networks, or VPNs, to mask their location and ordered some “VIP customers” with significant US ties to use front companies, according to the report. CFTC. Those VIPs included U.S.-based trading companies, the CFTC says.

Deals with trading firms would have been facilitated by a formal process at Binance called “VIP Handling,” the CFTC said.

Hayden Hughes, co-founder of social trading platform Alpha Impact, said the CFTC lawsuit raises the specter of trading firms pulling out of Binance.

“Market makers generally wouldn’t want to be caught in the crossfire between US regulators and Binance,” Hughes said.

With the contributions of the agency