Crypto giant Binance sees $1.6 billion in crypto withdrawals after CFTC lawsuit

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Investors withdrew as much as $1.6 billion of cryptocurrency from the world's biggest crypto exchange, Binance, after the platform was sued by a top US regulator, Commodity Futures Trading Commission (CFTC).

The US CFTC sued the crypto giant along with its CEO and former top compliance executive, alleging that they were operating an "illegal" exchange and a "sham" compliance programme.

Following CFTC's lawsuit, Binance witnessed $1.6 billion of overall withdrawals and $852 million in the last 24 hours, according to blockchain data tracker Nansen, in a step up from the average of $385 million per day over the last two weeks.

Nansen research analyst Martin Lee said that the outflows were higher than usual, but still not as high as 13 December, when investors pulled $3 billion from Binance as they grew nervous about the status of Binance's reserves.

"The crypto market cap is up by 2.56% and currently stands at $1.16 trillion with BTC and ETH leading the effort. CFTC has put the focus on Ethereum by showing its support for ETH as a commodity, which resulted in a mini-rally of 3.92% in just 24 hours. BTC is marginally up by 1.54% and is trading at $27,371.52 at the time of writing. Investors are closely watching the developments at Binance related to CFTC action," said BuyUcoin CEO Shivam Thakral.

Binance called the CFTC’s lawsuit “unexpected and disappointing." The crypto platform said it’d been working with the regulator for more than two years, had beefed up compliance staff, and would continue to collaborate with authorities in the US and elsewhere.

As per CFTC, one unidentified US firm used a Cayman Islands subsidiary to trade on Binance. Another traded on Binance by entering into a “services agreement" with an