Binance US, the American arm of the global cryptocurrency exchange Binance, is grappling with a substantial drop in trading activity as its legal disputes with US regulatory authorities escalate. According to recent data from independent research firm CCData, the monthly trading volume on Binance US has plummeted by a staggering 98% from January to August 2022, with further declines expected in September.
Binance US Experiences a Sharp Decline in Trading Volume
In the first half of September, the exchange recorded a mere $115.7 million in trading volume, a sharp contrast to the $286 million in August. A prominent cryptocurrency market data provider, Kaiko, also makes a similar point on X (Twitter), noting that Binance US’s weekly trade volume has decreased from a yearly high of nearly $5 billion to just $40 million.
Binance US's weekly trade volume has fallen from a yearly high of nearly $5bn to just $40mn. pic.twitter.com/1imacBf9cA
— Kaiko (@KaikoData) September 18, 2023
Meanwhile, most of this decline occurred after the US Commodity Futures Trading Commission (CFTC) took legal action against Binance’s founder, Changpeng Zhao, in March.
The situation worsened in June when the US Securities and Exchange Commission (SEC) filed a lawsuit against both Binance.US and Zhao, alleging multiple violations, including misrepresentations regarding trading controls and oversight on the Binance.US platform. These allegations have significantly disrupted Binance US’s operations.
After the SEC complaint, the exchange lost its banking support, halted US dollar deposits, and initiated a series of layoffs. Last week, CEO Brian Shroder and a few other top executives also left their positions.
As of the latest data from Coingecko.com, Binance.US’s daily trading volume stands at approximately $11.2 million, while Coinbase Global Inc., the largest US-based cryptocurrency exchange, reports a daily trading volume of $964 million at press time. The Binance global crypto exchange leads the market with over $4 billion.
Ongoing Legal Disputes
The legal battle between Binance.US and the SEC is ongoing. The SEC lawsuit, filed in June 2023, accuses Binance.US of offering unregistered securities and violating securities laws. Binance.US has vehemently denied these allegations and is taking measures to enhance its compliance with US regulations, including appointing a new CEO with a background in the financial industry.
The outcome of this case carries significant implications for the cryptocurrency industry in the United States. If the SEC prevails, it could set a precedent for other cryptocurrency exchanges and companies, potentially forcing them to register their products and services with the agency.
