SEC charges trigger a $790 million withdrawal from Binance crypto exchange

After U.S. regulators announced 13 securities charges against Binance and its founder, Changpeng Zhao, crypto investors pulled $791.6 million from the crypto exchange in 24 hours. Investors moved their assets to several exchanges after FTX collapsed in November 2022, but Binance received the lion’s share of those inflows. Some of these gains have been returned following the Securities and Exchange Commission’s charges on Monday. After the charges were unveiled, investors withdrew $1.65 billion worth of assets from Binance and $13 million from contested Binance’s U.S. arm on the Ethereum blockchain. Inflows totaled $871.8 million and $11.53 million to Binance and Binance.US, respectively.

Binance was alleged by the SEC to have engaged in unregistered offerings and sales of securities, and Zhao and his entities improperly mixed investor funds with Binance’s funds. In addition, the agency alleged the exchange circumvented its controls by allowing institutional U.S. investors to use Binance’s international exchange rather than its supposedly firewalled U.S. exchange. The Commodity Futures Trading Commission unveiled similar charges against the crypto exchange earlier this year. The allegations of commingling and compliance failings echo the charges leveled against FTX founder Sam Bankman-Fried and his collapsed exchange. In response to the allegations, Zhao and Binance’s two entities strongly denied them.