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SEC Binance Crackdown Good News for DeFi Ecosystems

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By Augustine Mbam - - 5 Mins Read
Vector illustration of defi protocols overpowering traditional finance institutions
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Vector illustration of defi protocols overpowering traditional finance institutions


With the recent crackdown on centralized crypto establishments, it seems like it has opened an opportunity for the decentralized finance ecosystem to thrive.


On Monday through Tuesday, the crypto industry witnessed a series of lawsuits coming from the United States Securities and Exchange Commission against prominent exchanges. Binance and Coinbase were the most notable, as they saw a large percentage of their users go on a withdrawing spree.


The legal battles between Binance, Coinbase, and the SEC, along with other exchanges, caused a ripple effect in the crypto industry. However, during this time, decentralized exchanges experienced a significant increase in trading volume. Reliable data shows that the trading volume in different DeFi exchanges escalated to almost $800 million in the last 48 hours.


There has been a noticeable shift among crypto enthusiasts from centralized entities to DeFi exchanges. In fact, over the past two days, the DeFi volume by a chain across the top three decentralized exchanges (DEX) has surged by 444%. This increase in median trading volume is largely due to a growing number of crypto investors and users transferring their assets from centralized exchanges to DeFi. It's worth noting that recent issues with Binance and Coinbase have caused some concern and uncertainty within the industry leading to massive fear, uncertainty, and doubt (FUD).


CoinGecko reported that the total daily trading volumes on Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum), and PancakeSwap v3 (BSC) surged by a massive percentage. Data from CoinGecko confirmed that their daily trading volume increased by more than $792 million between June 5 and June 7. The two decentralized exchanges mentioned above (Uniswap and Pancakeswap) account for more than 53% of the total DEX trading volume in the last 24 hours. 

Depositing a token, coins, dollar symbol

Investors Massively Using DEXs For Crypto Activities 

Since Coinbase and Binance SEC lawsuit, it appears that investors are now massively using DEXs to perform their day-to-day transactions. All the services included in the DeFi ecosystem are all worked up due to increased activity. Not only are investors now trading altcoins in these DEXs, but they're also now moving the trading of stablecoins in these platforms. 


For instance, Curve, a platform that offers the trading of stablecoin, has been booked up in the past two days. The trading volume at Curve increased by a whopping 328% within the past 24 hours. The principal activity that is going on in this platform is the buying and selling of stablecoins USDT and USDC. 


In recent weeks, decentralized exchanges (DEXs) have once again exceeded the trading volumes of centralized exchanges. This trend was also evident during the meme coin frenzy in May, when DEXs surpassed major centralized exchanges such as Coinbase. The significance of this is that DEXs provided the ability to trade meme coins that were not available on certain centralized exchanges. 

Centralized Exchanges Record Massive Losses 

The current market scenario is witnessing a flourishing trend in DEXs, whereas centralized crypto exchanges are suffering from colossal losses. According to the recent market data from Nansen, it has been revealed that Binance and Coinbase have undergone substantial losses, majorly due to the withdrawals made by users in an attempt to secure their assets in case of a market crash.


"Netflow to Binance over the past 24 hours is $778.6M negative on Ethereum - $871.7M in and $1.65B out


Over the past hour, net flow on Ethereum continues to be negative at $35.7M on Ethereum - $14.8M in and $50.5M out," Nansen report highlighted on Twitter.