SEC Crackdown Causes 444% Increase In DeFi Trading Volumes

SEC Crackdown Causes 444% Increase In DeFi Trading Volumes

There has been a massive surge in the trading volumes of DeFi in the last couple of days. According to reports, Coinbase and Binance saw a surge in trading volumes of over $800 million in the past two days.

Reports say that there was an increase in the median trading volume of around 444% in just a matter of 48 hours. This was primarily due to the growing legal actions taken by the United States regulators legal actions against the two cryptocurrency exchanges.

The aggregated data from CoinGecko shows that the total daily trading volumes for the PancakeSwap v3 (BSC), Uniswap v3 (Arbitrum), and Uniswap v3 (Ethereum) saw an increase by around 53% in the last 24 hours.

Increase in the Overall Trading Activity

Additionally, the trading volume on Curve, a decentralized exchange that supports stablecoin trading, increased by 328%. The majority of the trading occurring on Curve is concentrated on trading the USD Coin USDC stablecoins, which are linked to the US currency.

Following the meme coin mania in May, trading volumes on DEXs momentarily eclipsed those of Coinbase. Also, the meme coins weren’t available on significant centralized exchanges.

As a result, cryptocurrency buyers hurried to buy tokens like Pepe (PEPE) and Turbo (TURBO) using Uniswap and a variety of other decentralized networks.

The net outflows on Binance, or the disparity among the assets’ value entering and leaving the exchange, hit an astounding $778 million as DEX volumes increased. Notably, current net outflows remain much below the overall exchange’s reserve.

Binance had more than $8 billion worth of stablecoins in its account at the point of writing this news.

Increasing Legal Action by the U.S. Securities and Exchange Commission

The market mania coincides with a wave of legal actions taken by the Securities and Exchange Commission (SEC) against cryptocurrency exchanges. On June 6, the SEC filed a lawsuit against Coinbase, claiming, among other things, that it provided unauthorized securities and operated as an unlicensed broker.

A day earlier, the SEC had also brought a case against Binance, its US arm, and CEO Changpeng Zhao (CZ) of the crypto exchange based on claims of a similar nature.

The SEC claimed that Binance was doing business unlawfully in the United States because it did not establish itself as a securities exchange. Zhao was alleged to have been sued as a “controlling person.”

The SEC has been increasing its regulations and having tougher scrutiny in the wake of the crypto winter crash in 2022 and the collapse of the FTX crypto exchange. It has been increasing the legal actions and proceedings against a wide range of crypto exchanges.

In response, many crypto exchanges including Binance and Coinbase have threatened to quit the crypto market. This has been further aggravated by ongoing political issues currently rattling the US economy.

SEC Looking to Get a Restraining Order for Binance

On June 6, the SEC requested eight actions in a sudden move for a temporary stay of proceedings against Binance, its US arm, and the crypto exchange’s CEO in the District of Columbia U.S. District Court.

The freezing of Binance.US’s resources and the return of cash and cryptocurrencies owned by or for the sake of US clients are among the proposed actions. The motion also requires tougher restrictions on discovery and stops Binance from altering, deleting, or hiding any records.

According to the filing,”Considering Binance’s history of unlawful behavior, overlook of U.S. law, avoidance of oversight from regulators, and unresolved questions regarding different monetary transfers and the management and custody of Customer Assets, the aforementioned actions are urgently required to guarantee the security of customer assets and avoid the depletion of accessible assets for any judgment.”