In the wake of recent regulatory scrutiny, traders have been withdrawing their funds in droves from the cryptocurrency exchange Binance.
According to Nansen’s data, the exchange witnessed a net outflow of $356 million in the last 24 hours alone, a number that rises to almost 4X that amount when considering the weekly timeframe.
To add salt to injury, Binance’s very own BNB token was dealt a blow of more than 5% in the aftermath of the recent clampdown by both the SEC and the New York Department of Financial Services.
It dropped to around $287 on February 13, 2023. However, the token managed to recuperate some of its losses on the morning of February 14, 2023, rising to $292.81 — a 0.13% jump in the last 24 hours.
BNB’s value drops
This week has been challenging for BNB, suffering a drop of 10% over the past seven days.
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Furthermore, Coinglass reports that leveraged traders of BNB faced overnight liquidations amounting to $2.09 million.
Regardless, even with the recent setback, BNB’s market capitalization of more than $45 billion keeps it securely among the elite top five cryptocurrencies.
SEC coming down hard
On the other hand, Paxos verified yesterday that the SEC intends to sue the cryptocurrency company for breaching laws pertaining to investor protection. Adding to the regulatory woes, the Binance USD (BUSD) stablecoin has been accused by the watchdog of being an unregistered security.
The SEC could choose any stablecoin to attack and went with BUSD, even though Paxos is fully regulated and compliant.
This is the path of most resistance.
Seems like a quiet and misguided attack on Binance.
— The Wolf Of All Streets (@scottmelker) February 13, 2023
In a tweet, Binance’s CEO Changpeng “CZ” Zhao expressed that if the stablecoin is labeled a security, it will have far-reaching consequences on the future trajectory of the cryptocurrency industry.
5/ On the alleged SEC vs Paxos lawsuit, I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos.
I am not an expert on US laws. But personally, I agree with Mile’s logic here (not that it means much): https://t.co/b8H3bjLAoy
— CZ 🔶 Binance (@cz_binance) February 13, 2023
As the Commission’s purported actions came to light, the New York Department of Financial Services (NYDFS) instructed Paxos to suspend the release of any further BUSD.
In retaliation, Paxos released a statement, stating that it “strongly objects to the SEC staff’s position as BUSD does not fall under the classification of a security as per federal securities laws.”
While the suspension takes effect from February 21, Paxos has confirmed that it will continue to support BUSD, and customers onboarded with the firm will still be able to redeem the stablecoin until February 2024 at the very least.
Last week, the SEC imposed a $30 million fine on the crypto exchange Kraken for its unregistered staking service. As a result, Kraken has decided to terminate this service for US citizens.