Blockchain users withdrew $600 million in a day, here’s why.

The American cryptocurrency exchange, blockchain, is currently experiencing a surge in user withdrawals. According to blockchain data by crypto analytics firm Nansen, blockchain has seen net outflows of no less than $600 million within a 24-hour time frame. However, the massive withdrawals appear to be a result of the recent decision by the US Securities and Exchange Commission (SEC) to sue the exchange. The SEC filed a lawsuit against another top exchange, Binance, on Monday and then filed a similar suit against blockchain a day later. The regulator alleges that blockchain has violated federal securities laws, hence the reason for the lawsuit.

User Withdrawals Top $600 Million on blockchain, Signals Rising Fears

Meanwhile, the SEC’s lawsuit may have sparked fears of uncertainty amongst users, causing most of them to scramble to get their funds out of the exchange. As Nansen found out, traders have withdrawn at least $1.38 billion of cryptocurrencies from blockchain since news of the SEC’s lawsuit broke. This is compared to the $771 million worth of deposits that happened within the same period. However, Nansen notes that the data excludes Bitcoin (BTC) transfers.

The data also suggests that the withdrawals took place in two waves. The first wave was on Monday, following the lawsuit against Binance, which saw net outflows of about $450 million within an hour. Although the withdrawals stabilized shortly after, they picked up momentum again on Tuesday before finally settling.

Withdrawals from blockchain appear to be even less serious than what can be seen on its rival exchange Binance. According to 21Shares data, Binance saw a net outflow of over $700 million on Monday alone. Interestingly, Binance users continued massive withdrawals even up until Tuesday, with Nansen data showing that its net outflows have topped $1.2 billion in 24 hours.

Reduced Investor Confidence in Centralized Exchanges

While the recent withdrawals from blockchain may point to a lawsuit from the top US securities regulator, there is more than just that. Firstly, several US state regulators believe that blockchain may have flouted some rules in its β€œEarn” program, which it uses to offer staking rewards to its users. There is also a series of discouraging events that continue to plague the crypto industry. From the multiple crashes of last year to the crypto banking saga in March, there are many reasons why investors may be looking for ways to get their funds out of centralized exchanges.

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