Decline in Trading Activity

Binance.US, the American counterpart of the global cryptocurrency giant Binance, is undergoing significant turbulence as its trading volumes take a downturn amidst regulatory and leadership upheavals. 

The latest data from Amberdata on The Tie Terminal revealed that on September 16, 2023, the trading volume on Binance.US plummeted to a mere $5.09 million. This contrasts to last year’s period, where the volume was an impressive $230 million.

Binance.US volume

Image source: Binance.US exchange volume over the past 12 months. Source: The Tie Terminal/Amberdata

Additionally, in August, the combined trading volume of cryptocurrency spot and derivatives on centralized exchanges plummeted by 11.5%, reaching a meager $2.09 trillion.

SEC’s Damning Lawsuit

Triggering this decline in trading activity is the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) on June 5. Both Binance and Binance.US are facing charges that include unregistered securities offerings, wash trading, and other violations. 

Specifically, the SEC claims Binance.US neglected its duties in registering as a broker-dealer and overlooked the registration of its staking-as-a-service program. After this lawsuit, Binance.US suspended trading for over 100 token pairs, leading to a rapid plunge in trading volumes and investor trust.

More troubles with Binance.US leadership

Binance.US is not just grappling with external pressures but is also witnessing an internal leadership crisis. Brian Shorder, the company’s former CEO, resigned last week, marking the latest in a series of high-profile departures. 

Following in his footsteps were Krishna Juvvadi, the Head of Legal, and Sidney Majalya, the Chief Risk Officer. Rumors abound that these exits are linked to an ongoing U.S. investigation into the activities of Binance and its CEO, Changpeng “CZ” Zhao.

Addressing speculations surrounding Shorder’s departure, CZ took to X (formerly Twitter), stating that Shorder was on a “deserved break.” 

He added: “Under his leadership, Binance.US raised capital, improved its product and service offerings, solidified internal processes, and gained significant market share, all of which helped to build a more resilient company for the benefit of customers. We are grateful for his contributions.”

SEC’s Allegations and Unsealed Documents

In a new twist, the SEC has accused Binance.US of being uncooperative in their ongoing investigation, stating that 220 documents were produced during the discovery phase. In a noteworthy development on Sept. 15, a judge granted the SEC’s motion to unseal certain case-related documents that were previously redacted. These are anticipated to be accessible soon, potentially offering insights into the exchange’s operations.

DeFi’s Turbulent Waters

On a related note, the decentralized finance (DeFi) landscape has faced challenges equally. As reported by investment manager VanEck, DeFi exchange volumes dropped by 15.5% in August, settling at $52.8 billion. Key tokens like Uniswap’s UNI and Curve DAO’s CRV experienced significant downturns, leading to a broader market contraction. 

Worries persist despite some positive indicators, such as the dismissal of a lawsuit against Uniswap Labs and the growth of stablecoins. Following a severe exploit in July, Curve Finance saw its governance token CRV drop 24% in August. Concerns are also mounting over Curve Finance founder Michael Egorov’s significant debt, backed mainly by the CRV token.

Final thought

The cryptocurrency market is experiencing a bearish phase, with both Binance.US and the broader DeFi market facing significant challenges. According to expectations, the crypto market will continue to struggle until the next Bitcoin halving, scheduled to take place in April 2024. This means that cryptocurrency investors should prepare themselves for more difficult times in the crypto space.

While both Binance.US and the DeFi market are at a crossroads, facing regulatory, operational, and market-driven challenges, stakeholders should keenly observe how Binance.US, in particular, manages its legal battles, rebuilds its leadership team, and seeks to re-establish its foothold in the ever-evolving crypto ecosystem.