Binance.US is facing challenges as market makers abandon the crypto exchange, and Coinbase takes the lead in the crypto exchange market (1). Binance.US has also announced that it will suspend US dollar deposits, as its banking partners prepare to pause the channels to withdraw US dollars from the exchange (2, 3).
The US Securities and Exchange Commission (SEC) has sued Binance, alleging that the company operated an illegal trading platform in the US and misused customers' funds (4). Binance.US has a support center that provides information on how to use the platform, including how to buy and sell cryptocurrency, and how to complete identity verification (5).
The platform also provides real-time status updates on its services, including deposit and withdrawal status, scheduled maintenance periods, and historical data (6).
What are the reasons for the decline of Binance.US liquidity:
The decline of Binance.US liquidity can be attributed to several factors, including:
Removal of zero-fee promotion: Binance.US removed its 10-month zero-fee promotion for 13 different BTC pairs, which caused market makers to leave the platform. This led to a decline in liquidity, as monthly trading volumes for the exchange’s most-traded pair, BTC-USDT, fell from 2 billion in April (1).
Banking failures: The drying liquidity has been more pronounced after the spate of banking failures earlier this year, which led to even more chop for the price of Bitcoin (1).
SEC lawsuit: The US Securities and Exchange Commission (SEC) has sued Binance, alleging that the company operated an illegal trading platform in the US and misused customers' funds. The lack of liquidity on Binance.US will soon cause problems for traders seeking accurate pricing compared to other exchanges, with Bitcoin bid-ask spreads widening (2, 3).
Withdrawal of US dollar deposits: Binance.US has announced that it will suspend US dollar deposits, as its banking partners prepare to pause the channels to withdraw US dollars from the exchange. Due to this, Binance US said it will no longer be able to process deposits or withdrawals in US dollars (4).
These factors have led to a significant drop in liquidity on Binance.US, with market makers and traders reportedly fleeing the exchange in large numbers. A research report by Kaiko revealed that the liquidity on Binance.US gauged through the aggregated market depth for 17 tokens, plunged nearly 80% in June (5, 6, 3).
What measures has Binance.US taken to address the decline in liquidity:
There is no clear information on the measures that Binance.US has taken to address the decline in liquidity. However, there are some factors that have contributed to the decline in liquidity, including the removal of zero-fee promotions, banking failures, and the SEC lawsuit (1, 2, 3, 4, 5, 6).
The exchange has announced that it will suspend US dollar deposits, as its banking partners prepare to pause the channels to withdraw US dollars from the exchange.
Due to this, Binance US said it will no longer be able to process deposits or withdrawals in US dollars (4). It remains to be seen what steps Binance.US will take to address the decline in liquidity and win back market makers and traders.