Binance Market Share Drops After US Fraud Accusations

Binance, the world’s largest cryptocurrency exchange by volume, has experienced a significant drop in market share following accusations of fraud by a US regulator and the removal of zero-fee trading for certain trading pairs. According to research platform Kaiko, Binance's market share relative to other crypto exchanges has fallen to 54% from 70% over the past two weeks. This is the lowest it has been since November 5th and the lowest sustained market share since August. The drop comes after the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its founder Changpeng Zhao, alleging the exchange offered unregistered crypto derivatives products in the US, in violation of federal law.

Additionally, Binance experienced its lowest Bitcoin (BTC) trading volume since July 2022 on March 27th after ending its zero-fee trading promotion for 13 Bitcoin spot trading pairs. Kaiko suggests that Binance's excess volume was largely due to zero-fee trading and that the end of the promotion resulted in an even dispersal in market share among remaining exchanges. Kaiko also noted that as global exchanges face increased regulatory scrutiny, the US market is particularly fragile for crypto exchanges.

Coinbase, another US-based cryptocurrency exchange, also saw a drop in market share in the first quarter. Coinbase's weekly average dropped from 60% to 49%, while Binance.US increased from 8% to 24%, according to Kaiko. As regulators continue to focus on the cryptocurrency industry, it remains to be seen how these market share trends will continue to shift over time.