Coinbase Users Withdraw Over $600 Million in One Day, Here’s Why

American cryptocurrency exchange Coinbase is currently experiencing a high surge in user withdrawals. According to blockchain data by crypto analytics firm Nansen, Coinbase has seen, within a 24-hour time frame, net outflows of no less than $600 million.

The massive withdrawals, however, appear to be a result of the recent decision by the US Securities and Exchange Commission (SEC) to sue the exchange. Having filed a lawsuit against another top exchange Binance on Monday, SEC also slammed Coinbase with a similar suit a day later. The regulator alleges that Coinbase has violated federal securities laws, hence the reason it is suing.

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

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 As Nansen found out, traders have withdrawn at least $1.38 billion of cryptocurrencies from Coinbase since news of the SEC’s lawsuit broke.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

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. And though the withdrawals stabilized shortly after, it once again picked up momentum on Tuesday before finally settling.

Meanwhile, withdrawals from Coinbase appear to be even less serious than 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 the 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 Coinbase may point to a lawsuit from the top US securities regulator, there is more than just that. Firstly, several US state regulators believe that Coinbase may have flouted some rules in its “Earn” 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 a lot of reasons why investors may be looking for ways to get their funds out of centralized exchanges.