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Following the announcement of the lawsuit by the US Commodity Futures Trading Commission (CFTC) against Binance, the world’s largest cryptocurrency exchange, there have been reports of significant capital outflows. The exchange has reportedly experienced $218 million in outflows since the CFTC disclosed the legal action.
The CFTC has accused Binance of violating US trading and derivatives rules, which has led to concerns among some users. Token outflows are common in the market and can be a natural part of the ebb and flow of trading activity.
However, the timing of these outflows is noteworthy, as they coincide with the events around the Commodity Futures Trading Commission lawsuit and the legal actions against the crypto exchange.
CFTC Lawsuit Against Binance Sends Shockwaves Through Crypto Market
Since the announcement of the lawsuit by the US CFTC against Binance, there have been reports of significant outflow from the exchange. According to data from cryptocurrency analytics firm Glassnode, Binance saw a net outflow of $218 million in the hours following the lawsuit’s announcement.
The outflows could lead to increased regulatory scrutiny of Binance’s operations in the US. Which could result in more stringent compliance measures and increased costs for the exchange.
These allegations could further impact Binance’s profitability and ability to compete with other cryptocurrency exchanges in the jurisdictions of US regulatory agencies.
However, Binance’s total assets on-chain remain high, at $75.6 billion as of this writing. Regarding inflows, Binance has also been experiencing increased deposit activity in certain regions, such as Asia. This suggests that while some users withdraw their funds from the exchange, others take advantage of the market volatility to buy lower-priced tokens.
Bitcoin has also taken a hit, probably by the ongoing concerns in the sector, mostly from US-based investors. In the last 24 hours, Bitcoin has experienced a drop of over 2.5%, falling below $27,000 following the disclosure of the lawsuit against Binance. Despite several attempts to breach it in recent weeks, the world’s largest cryptocurrency has struggled to surpass the resistance level of $28,700.
As of the time of writing, Bitcoin is trading at $27,000, indicating a bearish sentiment in the market. The news of the lawsuit against Binance has likely added to the general volatility in the cryptocurrency market, which has seen several ups and downs in recent weeks.
Overall, the outflows following the CFTC lawsuit against Binance highlight the potential impact of legal and regulatory challenges on cryptocurrency exchanges. It will be interesting to see how this situation develops over the coming days and weeks and whether or not Binance takes any action in response to the outflows and the lawsuit filed by the US CFTC.
Featured image from Unsplash, chart from TradingView.com
