Following a recent strike at major crypto exchanges, the SEC has inadvertently caused an over 400% rise in trading volumes on DeFi platforms.
The ongoing crypto crackdown by the US Securities and Exchange Commission (SEC) has come with a silver lining for the crypto industry, especially for decentralized finance (DeFi). According to crypto data aggregator CoinGecko, the top three largest decentralized exchanges (DEXs) have recorded a 444% jump in median trading volume in the last 48 hours.
The data shows a combined $792 million increase in total trading volume for Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum), and PancakeSwap v3 (BSC) since June 5. CoinGecko data also shows that Curve (Ethereum) jumped by 328%
The SEC has been hard on major crypto platforms, with an ongoing crackdown that has caused Binance quite a bit. According to blockchain data and research platform Nansen, Binance’s net outflow hit $778.6 million yesterday, calculated over 24 hours. Net outflow is the difference between value deposited and withdrawn from an exchange. Nansen put outflow at $1.65 billion for the period, compared to an inflow of $871.7 million.
SEC Crackdown on Binance and Coinbase
The US SEC has continued its strike at crypto companies as it files more indictments and lawsuits. On Monday, the commission filed a lawsuit against Binance over multiple violations.
The SEC said Binance deliberately mixed up user funds and put customers’ assets at risk. It also noted that Binance might be guilty of misappropriating billions of dollars in customer deposits using a separate firm owned or controlled by CEO Changpeng “CZ” Zhao.
In addition to the above, the SEC also said Binance did not do enough to prevent US customers from using Binance.com. The Binance.US platform is a separate platform for users in the US, which should operate independently and comply with US trading and securities laws. However, the SEC claims that Binance sidestepped this requirement for “high-value customers”. SEC Director Gurbir S. Grewal said in a statement that Binance “consciously chose to evade” laws.
Binance has since responded to the allegations, calling them false, and accusing the SEC of acting in bad faith.
A day after the Binance lawsuit, the SEC also filed a charge against Coinbase (NASDAQ: COIN) at a New York Federal Court. According to an official announcement, the SEC said Coinbase was conducting business as an unregistered national securities broker and exchange. The SEC also said Coinbase did not register the offer and sale of its staking-as-a-service (SaaS) program. According to Grewal, Coinbase earned billions at customers’ expense by omitting necessary investor protections.
DeFi Could Benefit from SEC Enforcement
The SEC’s regulatory spotlight directed at centralized exchanges could benefit decentralized exchanges and DeFi. Since the decentralized platforms operate with more autonomy, members of the crypto community may switch sides.
In addition to the freedom DeFi enjoys, regulatory agencies like the SEC and the CFTC are too busy cracking down on CEXs. This period of seeming neglect from authorities may give DEXs a chance to grow their coffers and increase trading volumes.
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