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Coinbase Users Hurriedly Withdraw $600M in 24 Hours, and It's Not Fear for a Crash

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By Erika John - - 5 Mins Read
Coinbase logo on a smartphone and money
Shutterstock |
Coinbase logo on a smartphone and money


The American cryptocurrency exchange, Coinbase, is currently in a difficult situation. After letting go of over 950 employees to stay afloat, the company is at risk of losing its users. Within 24 hours, its customers have withdrawn over $600 million worth of assets due to a recent announcement by the Securities and Exchange Commission. The SEC intends to sue Coinbase for allegedly violating specific cryptocurrency regulations that govern the industry, as the exchange failed to comply with these laws.


According to blockchain data by crypto analytics firm Nansen, Coinbase saw a massive withdrawal of assets reaching up to $600 million net. Apparently, Coinbase wasn't the only crypto exchange that was hit with a lawsuit. Even the most valuable crypto exchange, Binance, first received its case from the SEC on Monday


Coinbase FUD-fueled withdrawal started on Monday when the Securities and Exchange Commission announced that they had sued Binance. They accused Binance of carrying out illegal trades without registering the securities being traded on their platform. A day later, Coinbase received its lawsuit, which alleged that it had broken many federal laws.

Coinbase Lawsuit From the SEC 

About 24 hours after Binance was sued for breaking regulatory laws, Coinbase was handed theirs. The US Securities and Exchange Commission accused them of running an illegal platform that allowed people to make illicit trades.


"The Securities and Exchange Commission charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. The SEC also charged Coinbase for failing to register the offer and sale of its crypto asset staking-as-a-service program," the federal Commission alleged. 


They also claimed that Coinbase had made billions of dollars from at least 2019 to date from running such an illegal business. The SEC alleges that Coinbase offers the service of being an exchange, broker, and clearing agency without having the proper licenses and registrations that allow them to operate in the United States.


"According to the SEC's complaint, since at least 2019, Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities. The SEC alleges that Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law," the Securities and Exchange Commission said in their new memo. 


Finally, the Commission said the integral part of the lawsuit was that Coinbase was endangering its customers by not being registered.


"As alleged in the SEC's complaint, Coinbase's failure to register has deprived investors of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others," they added. 

Coinbase Losses $600 Million From The SEC Lawsuit 

Brian Armstrong

Immediately the public heard that the SEC sued Coinbase for breaking their regulatory laws, and it sparked immediate fear and uncertainty, causing many of them to withdraw their funds from the exchange. About $1.38 billion of cryptocurrencies has been withdrawn from Coinbase since the SEC announced their lawsuit. In return, they have seen a deposit of only around $771 million. 


The crypto exchange has seen more than $600 million leave the company after the SEC served the lawsuit. Another reason for the withdrawals is that users are trying to reduce their dependence on centralized exchanges after what happened in the past.