• The SEC filed lawsuits against the two largest exchanges on Monday and Tuesday.
• Both exchanges saw Ethereum withdrawals increase following the news, with Coinbase seeing 5% of its ETH withdrawn and Binance seeing 3%.
• Bitcoin withdrawals on both exchanges remain insignificant, with only 0.1% of Coinbase’s total balance withdrawn in response to the news.
The Securities and Exchange Commission (SEC) has ramped up its regulatory clampdown this week, filing lawsuits against two of the biggest crypto exchanges on Monday and Tuesday. Binance was first to receive a lawsuit on Monday, followed by Coinbase on Tuesday.
On-chain data reveals that Bitcoin withdrawals have been relatively steady since the news broke out, with only 15,000 BTC being withdrawn from Binance since Sunday and 550 BTC from Coinbase after it was sued on Tuesday. The figures represent a negligible percentage of their respective total balances, showing no significant change in investor behaviour as a result of the news. Furthermore, Bitcoin’s price has rebounded well despite the news, trading at around $26,800 – only slightly lower than prior to the lawsuits ($27K).
Unlike Bitcoin withdrawals which seem unaffected by the news, Ethereum withdrawals have increased significantly since it broke out. On Tuesday alone, 5% of Coinbase’s ETH balance was withdrawn and 3% of Binance’s reserves were released – likely in response to the SEC’s actions against both exchanges.
Coinbase’s lawsuit presents as more intriguing than Binance’s due to its clear regulation efforts over recent years; after floating on Nasdaq stock exchange in 2021 it has been striving for greater regulation compliance within its operations.
Overall there is not much evidence to suggest that investors are withdrawing funds en masse following the SEC’s lawsuits against Binance and Coinbase this week – at least when looking at Bitcoin flows – although Ethereum seems to be taking more notice.