Following the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Binance, one of the biggest cryptocurrency exchanges, and its founder Changpeng “CZ” Zhao, the cryptocurrency markets saw major turmoil on Tuesday. The case, which accuses Binance of breaking federal securities rules, increases regulatory vigilance in the cryptocurrency sector.
Net outflows from Binance during U.S. trading hours surpassed $230 million shortly after the SEC’s statement. Data from Nansen shows that Binance’s stablecoin balance is still strong despite this big outflow. A seven-day outflow of $519 million, or around 6% of assets, indicates the exchange’s current stablecoin holdings of over $8 billion. OKX, the exchange with the second-largest stablecoin balance, has $4 billion in its possession.
Seoul-based cryptocurrency analytics company CryptoQuant noted on Twitter that the withdrawal rates are within historical ranges, indicating that market players are not in a panic about the SEC action.
The lawsuit had an effect on a number of tokens referenced in the SEC complaint, including the BNB token from Binance, Solana (SOL), Cardano (ADA), Polygon (MATIC), Coti (COTI), Algorand (ALGO), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Axie Infinity (AXS), and Decentraland (MANA). During the Asian trading day, several of these tokens saw decreases.
SAND and MANA had the most losses of all the tokens with a metaverse emphasis. MANA fell by 11.6% to $0.45 and SAND fell by 13.0% to $0.52. BNB, Binance’s native cryptocurrency, also decreased by 8% to $276.48.
According to CoinGlass, positions worth almost $26 million were closed off during the Asian trading session. $16.8 million of this total represented long holdings. Long holdings accounted for $271 million of the $296.5 million in liquidations during the previous 24 hours.
The SEC’s case against Binance and CZ Zhao has made the cryptocurrency markets more volatile and unstable. Market players are intently watching events and their possible effects on the larger cryptocurrency ecosystem as regulatory scrutiny of the sector increases.
