Binance has hit yet another milestone, making it one of the top leaders in the industry. Yet, despite this, the crypto exchange’s market dominance is dwindling at present.
During the early trading hours of October 4th, the 24-hour trade volume on Binance surged to $17 billion, according to data from CoinGecko. This number is over $9 billion more than the next biggest cryptocurrency exchange, CoinBase.
However, despite all this, Binance’s market share is currently under a waning spell. Bloomberg reports that the largest cryptocurrency platform’s percentage of trading activity in the roughly $2 trillion digital asset market dropped to its lowest level in four years in September, suggesting that the company’s rehabilitation efforts are taking time to bear fruit.
Binance’s Market Cap Falls to 36.6%
The market share of the largest cryptocurrency exchange in the world decreased to 36.6% last month from 42.7% at the beginning of the year, Bloomberg reported while citing CCData.
In terms of derivatives trading, Binance’s 40.7% share is likewise the lowest in four years, while its 27% share of the spot market is the lowest since January 2021.
One of the major reasons for Binance’s fall in market cap is the ongoing legal troubles and the imprisonment of its CEO Changpeng Zhao.
In June 2023, the SEC filed a lawsuit against Binance, alleging that Zhao and the exchange had falsified trade volume figures, stolen customer cash, neglected to bar U.S. users from using the platform, and misled investors about their market surveillance measures.
Additionally, the regulator charged Binance with illegally enabling the trade of multiple cryptocurrency tokens that the SEC considered unregistered securities.
Binance’s Grapples With Legal Battles, Is a Recovery Possible?
Binance’s struggles with regulators across the globe has made a lot of investors move away from the troubled crypto exchange. Seeing this as an opportunity, many smaller crypto exchanges like ByBit, Crypto.com etc have tried garnering attention towards themselves.
Additionally, Binance’s failure to implement suitable anti-money laundering (AML) protocols gave rise to legal issues and Zhao’s penalty. This allowed terrorist groups and other criminals to carry out illicit activities on the network, such as money transfers from US users to countries that are subject to sanctions, such as Iran.
The US Department of Justice (DOJ) claims that Zhao willfully ignored the risks, which led to his violating US sanctions and transmitting money without authorization.
With these legal challenges, Binance’s customer traction might take a little while to get back to its original glory, given that the crypto exchange will have to work hard to clear its slate.