DeFi Trading Volumes Skyrocket by 444% on Binance and Coinbase in Wake of SEC Crackdown

Updated: 12 July 2023

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In the past two days, the amount of trading on decentralized exchanges has increased by almost $800 million.

This is likely due to the fact that, with the SEC crackdown, traders are looking for more secure alternatives to centralized exchanges, which are subject to more stringent regulations. The increased volumes on decentralized exchanges suggest that traders turn to these platforms for their trading needs.

Massive Surge in DEX Trading Volumes as Investors React to SEC Crackdown

Trading volumes on three of the most popular decentralized exchanges (DEX) have increased by 444% in the last 48 hours. Investors reacted to Coinbase and Binance’s legal actions by the US securities regulator.

Trading volumes surged over the course of June 5 to June 7 on three prominent decentralized exchanges: Uniswap v3 on Ethereum, Uniswap v3 on Arbitrum, and PancakeSwap v3 on BSC.

This was likely because the Ethereum network fees increased substantially and traders were looking for lower-cost alternatives. The three exchanges mentioned all provide lower transaction fees compared to Ethereum, which likely contributed to the surge in trading volumes.

The trading volume on these exchanges, which comprise 53% of the total volume on Decentralized Exchanges within the last 24 hours, soared by over $792 million. Data from CoinGecko highlights the growing interest and activity within the decentralized exchange ecosystem.

Moreover, Curve, a decentralized exchange specializing in stablecoin trading, experienced a significant increase in trading volume. Curve’s trading volume increased by 328%. The most popular stablecoins on Curve are USD Coin (USDC) and Tether (USDT), both pegged to the U.S. dollar.

Market Frenzy: DEXs Outpace Coinbase, Binance Sees Increased Outflows

As a result of the memecoin craze in May, the volumes of trading on decentralized exchanges briefly exceeded those on Coinbase. Trading activity surged as crypto investors sought to acquire tokens like Pepe (PEPE) and Turbo (TURBO) through Uniswap and other decentralized protocols. Due to the lack of centralized exchanges for these memecoins, investors turned to decentralized exchanges for them.

On Binance, the net outflows, which are the differences between assets coming in and going out, reached a remarkable $778 million during the surge in decentralized exchange volumes. Despite this, the current net outflows are still considerably smaller than the total reserve held by the exchange. Binance currently holds a stablecoin balance of over $8 billion.

Securities and Exchange Commission (SEC) legal actions are currently being taken against cryptocurrency exchanges, occurring simultaneously in the recent market frenzy. In a lawsuit filed on June 6, the SEC accused Coinbase of offering unregistered securities and operating as an unregistered securities broker.

On June 5, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance, Binance.US, and Binance CEO Changpeng Zhao (CZ). According to the SEC, Binance did not register as a securities exchange in the United States. In addition to suing Zhao as a “controlling person,” the charges also included allegations of fraud.

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