Binance Spot Volume Market Share Nosedives Following Regulatory Troubles In US

Cryptocurrency exchange platform Binance saw a massive drop in its spot volume market, following lawsuits filed against it by several regulators in the U.S.

The crypto exchange platform founded in July 2017 by its former CEO Changpeng Zhao (CZ) saw an 18% drop in its spot volume market share amongst centralized exchanges decline, even though it started the year in "its most dominant position ever," data from Kaiko, a market data provider, showed.

The report highlighted that the lawsuits by the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) against Binance and its U.S. arm Binance.US triggered significant outflows of liquidity and caused the exchange's market share to nearly zero.

"These charges did serious damage to Binance.US, causing massive outflows of liquidity and dropping its market share to nearly 0. Finally, in November, Binance settled with the DOJ for violating anti-money laundering rules; Binance reached an agreement with the CFTC at the same time. Notably, its battle with the SEC is ongoing," Kaiko said.

In January, Binance held nearly 70% market share but it dropped to 50% in March after the CFTC lawsuit and the end of the platform's trading promotions like zero-fee pairs.

Binance, however, witnessed some recovery despite the legal issues it was facing, according to the report, which underlined the positive impact of the historic $4.3 billion settlement agreement with the Department of Justice (DOJ) and other regulators for violating anti-money laundering, which the market saw as bullish.

Currently, Binance market share is at 43.8% against the 56.2% held by other centralized cryptocurrency exchange platforms.

Data also revealed that other centralized crypto exchange platforms saw significant growth from 37.7% at the start of the year to 56.2%, which was propelled around September, the same period when regulatory troubles of Binance were increasing.

Binance market share is at 43.8%, substantially down from its peak of 62.3% in January 2023.

The CFTC has ended its enforcement action against Binance and its founder Zhao this month after a U.S. court entered an order that would see both pay $2.7 billion and $150 million, respectively.

"U.S. District Court for the Northern District of Illinois has approved the previously announced settlement and entered a consent order of permanent injunction, civil monetary penalty and equitable relief against Changpeng Zhao and his companies Binance Holdings Limited, Binance Holdings (IE) Limited and Binance (Services) Holdings Limited (together, Binance)," CFTC said in a press release.