Binance Loses market Share Amid CFTC Lawsuit

Since the previous two weeks, the dominance of Binance in the world of crypto exchanges has slipped considerably following the lawsuit from the CFTC. Despite the bottleneck, the crypto exchange still holds the crown of being the largest exchange by volume. When compared to other crypto exchanges, the market share of Binance dropped from 70% to 54%, signifying a new low since November 2021. Similarly, Binance lost approximately 16% market share of its trading volume in Q1.

The CFTC previously sued Binance and its CEO, Changpeng Zhao, under the allegations that they offered unregistered crypto derivatives in the US, and violated Federal law. Binance still takes in greater volume than the rest of its competitors combined, but after its recent decision to end zero-fee spot and margin trading for BNB, BTC, and ETH with different fiat currencies and stablecoins, there was a sharp loss in trading volume.

Binance Becomes the Recent Victim of Ongoing Crackdowns

The excess volume of the crypto exchange disappeared in the blink of an eye with the end of zero-fee trading. Similarly, this was reflected in an even market share among the rest of the crypto exchanges. Recently, global crypto exchanges have become the new target for regulators, with the US market being increasingly fragile for the remainder of crypto exchanges. However, Binance was not the only exchange to lose market share, as Coinbase also went through the same dilemma. The weekly volume of Coinbase dropped to approximately 49% from 60% in the first quarter.

In the wake of ongoing regulatory activity, the uncertainty in the banking sector, and the mishaps caused by the collapse of the FTX exchange, an increase in the trend of shifting towards decentralized alternatives and self-custodial wallets was observed. Following the collapse of the FTX exchange, Bitcoin and ETH left the exchange in record-breaking numbers.

Furthermore, the daily trading volume of multiple decentralized perpetual exchanges also managed to reach $5 billion, classified as the highest since the collapse of Terra Luna Classic. Furthermore, this also includes the now-collapsed USTC stablecoin. The trading volumes on Uniswap now rival those of other crypto exchanges including Coinbase and OKX. However, their combined volume is still a mere fragment of what’s processed by Binance.

Never-Ending Problems For The Crypto Exchange

Along with plunging trading volumes, Binance is also fighting other battles. On Tuesday, a fake rumor led to panic in the crypto market when a Twitter user stated that Changpeng Zhao has been served with an Interpol Red Notice. The rumor led to a sharp decrease in the value of the Binance Coin (BNB) which is now trading at $311.

In other news, the legal battle between  Binance and the bankrupt crypto lender, Voyager is also picking pace. Recently, the US Court has stated that the case must be resolved by April 13. The filing said,

“Consummation of the plan by April 13 is necessary to preserve massive creditor value. The evidence is uncontroverted that, if the deal is not completed, Voyager’s creditors will lose roughly $100 million in value.”

These cases and developments often have a swift impact on the performance of BNB in the market. Therefore, the next few days are deemed critical for not only Binance but also its native token.