Investors withdraw $1.6bln in crypto from Binance

After US Commodity Futures Trading Commission’s lawsuit, Binance saw $1.6bln of overall withdrawals and $852mln during the past 24 hours

Investors pulled out $1.6bln of crypto currency from the world’s largest crypto exchange, Binance, after it was sued by a top US regulator, Commodity Futures Trading Commission (CFTC).

The Commodity Futures Trading Commission sued the crypto leader together with its Chief Executive Officer and former top compliance executive, claiming that they were operating an “illegal” exchange and a “sham” compliance programme.

After Commodity Futures Trading Commission’s lawsuit, Binance saw $1.6bln of overall withdrawals and $852mln during the past 24 hours, as per blockchain data tracker Nansen, in a step up from the average of $385mln per day during the past two weeks.

According to Nansen research analyst Martin Lee, the outflows were more than usual, but still not as much as on 13 December, when investors withdrew $3bln from Binance as they turned nervous about the status of Binance’s reserves.

The crypto market cap is 2.56 per cent higher and currently sits at $1.16 trillion with BTC and ETH leading the gains. The Commodity Futures Trading Commission has put the focus on Ethereum by showing its support for ETH as a commodity, which ensued in a mini-rally of 3.92 per cent in just 24 hours. BTC is slightly up by 1.54 per cent and is trading at $27,371.52 at one time. Investors are closely following the developments at Binance regarding Commodity Futures Trading Commission action, stated BuyUcoin Chief Executive Officer Shivam Thakral.

Binance termed the Commodity Futures Trading Commission’s lawsuit “unexpected and disappointing.” The company said it’d been working with the regulator for over two years, had increased compliance personnel, and would continue to cooperate with authorities in the US and elsewhere.

According to the Commodity Futures Trading Commission, one unnamed US firm used a Cayman Islands subsidiary to trade on Binance. Another traded on Binance by entering into a “services agreement” with an apparently unconnected entity organized under the law of Jersey, a British dependency. A third started trading via a Singapore subsidiary, then shifted to an entity incorporated in the Cayman Islands as well, as per the complaint filed in federal court on Monday.

Binance also directed some US customers to use virtual private networks, or VPNs, to obscure their location and directed some “VIP customers” with significant US ties to use shell companies, according to the Commodity Futures Trading Commission. Those VIPs included trading companies based in the US, the Commodity Futures Trading Commission said.

Arrangements with trading firms were supposedly facilitated via a formal process at Binance called “VIP Handling,” the Commodity Futures Trading Commission stated.