Binance US Liquidity Plummets by 76% Following SEC Lawsuit

Binance.US has experienced a significant decline in liquidity following the recent legal actions taken by the U.S. Securities and Exchange Commission (SEC). A report by the research firm Kaiko reveals that the market depth, a measure of liquidity, has plummeted by 76% for 17 top tokens on Binance.US since the SEC filed a lawsuit on June 5th.

Prior to the lawsuit, on June 4th, the market liquidity of Binance.US stood at $34 million. However, by June 12th, it had dwindled to a mere $7 million. This steep decline in liquidity indicates the negative impact of the legal proceedings on the exchange’s trading activities. Similarly, Binance’s global operations have also experienced a 7% decrease since the beginning of June.

Source: Kaiko

Additionally, Binance.US has witnessed a significant loss in its market share, dropping from 20% in April 2023 to a mere 4.8%. The Kaiko report sheds light on the initial stability and even slight increase in market depth on Binance following the lawsuit. However, the weekend saw a decline due to altcoin market sell-offs.

It is worth noting that Binance is not the only exchange to suffer a decrease in liquidity. Coinbase, the prominent U.S. exchange, which also faced regulatory scrutiny from the SEC in the previous week, saw a 16% decline in liquidity during the same period.

The reasons behind these liquidity declines for both exchanges are understandable, stemming from traders’ pessimistic sentiment leading them to withdraw liquidity to avoid a repeat of the asset lock-up situation experienced by FTX last November.

Furthermore, the report highlights an interesting detail regarding market share. While Binance.US has seen a decrease to 4.8% in June, Coinbase’s market share has increased from 46% to 64% in the past week, for reasons yet to be determined, according to Kaiko.

These recent developments illustrate the far-reaching consequences of regulatory actions on cryptocurrency exchanges. The decline in liquidity for Binance.US and other exchanges underscores the impact of legal proceedings on investor confidence and trading activities.

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