Binance US Market Share Plummets Amidst SEC Lawsuit

In recent developments, data from The Block reveals that Binance.US, a leading cryptocurrency exchange, has experienced a significant decline in market share. As of June 18th, its market share among cryptocurrency trading platforms has plummeted to a mere 4.35%, a sharp decrease from the 16% it held in April 2023.

It is evident that the ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC) is the primary catalyst for Binance.US’s substantial decline, pitting it against competitors providing USD services. Meanwhile, Binance’s parent company has seen a slight increase in its market share compared to the previous month, after losing momentum in Q1 2023.

Source: The Block

At the beginning of this month, the SEC filed a lawsuit accusing Binance of securities law violations and improper relations with its U.S. branch, Binance.US. The lawsuit alleged that Binance.US had illicitly transferred customer assets to organizations owned by its founder, Changpeng Zhao.

The SEC demanded the freezing of Binance.US’s operations. Binance, on the other hand, argued that the SEC’s legal troubles were “part of a rush to be the first to assert jurisdiction with other regulators, and investors don’t seem to be the priority of the Commission.”

Recently, the SEC and Binance.US reached an agreement regarding the freezing of assets, with a previous judge rejecting the SEC’s initial request. As part of the agreement, Binance.US ensures that only exchange staff have access to customer funds held by the branch.

Regardless of the outcome, the SEC’s actions have significantly impacted Binance.US. The platform had previously halted USD deposits and withdrawals, ceased over-the-counter trading, delisted several trading pairs, and laid off employees to streamline operations in preparation for an extended legal battle. Market makers Wintermute and Keyrock also suspended their services for Binance.US during this period. Trading volume on the exchange has plummeted, and liquidity has been at times insufficient.

According to The Block, the slippage on Binance.US when selling $100,000 worth of assets increased from 5.02% to 18.66% on June 18th. Meanwhile, the company’s monthly trading volume has plummeted from over $17 billion in March to a mere $1.69 billion presently.

Source: The Block

The implications of the SEC lawsuit on Binance.US are undeniable, as it struggles to maintain its position in the competitive cryptocurrency exchange market. The ongoing legal battle and associated operational disruptions have dealt a severe blow to the platform’s market share and trading activity. It remains to be seen how Binance.US will navigate these challenges and regain the trust and confidence of its users and investors in the future.

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