Binance US Market Share Evaporates as SEC Case Looms

As the Securities and Exchange Commission comes knocking, Binance US’s slice of market share among alternatives in America has faded to almost nothing.

On Tuesday, crypto data firm Kaiko published research showing Binance US’s market share has dropped compared to other exchanges available to customers in the U.S., falling to 1.5% from 8% at the start of this year.

The research also shows a decline in market share for Coinbase, America’s leading cryptocurrency exchange, which has seen its share fall to 50.5% from 56%.

“What we’re seeing here is the collapse of Binance US,” Director of Research at Kaiko Clara Medalie said on an analyst call. “This is a massive, massive drop-off in market activity solely linked to the SEC lawsuits.”

Both companies have found themselves squarely in the SEC’s sights, subject to high-profile lawsuits unveiled weeks ago. But the SEC’s lawsuit against Binance also names its CEO Changpeng Zhao, and BAM Trading, the operating company of Binance US, which is an affiliate of the international exchange.

Among the slew of accusations included in the SEC’s complaint against Binance, the agency alleges Binance US facilitated wash trading on its platform. The phony trades were allegedly conducted by the market maker Sigma Chain, an entity controlled and owned by Zhao.

Trading volume on Binance US has been in decline since June 6, the day after the SEC hit Binance, Zhao, and BAM Trading were with a litany of charges, according to CoinGecko data. 

On June 6, the US-based exchange posted around $250 million in trading volume. On Monday, trading volume on the exchange had fallen to just over $13 million, plummeting 94% since June 6. The figure represents the lowest trading volume in at least a year.

The surge in trading volume Binance US saw on June 6—it was the exchange’s busiest day within nearly a month—was likely bolstered by the SEC’s plea to freeze assets on the exchange, filing an emergency motion in court.

On Saturday, the SEC and BAM Trading clinched a deal that would prevent assets from being frozen on the platform in exchange for greater transparency. Pending approval from a federal judge overseeing the case, the agreement would also ensure fiat currency and digital assets belonging to Binance US customers stay in the U.S.