Binance.US Suffers 78% Market Crash since US SEC Lawsuit

UTC by Tolu Ajiboye · 3 min read
Binance.US Suffers 78% Market Crash since US SEC Lawsuit
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Binance.US experienced a significant market crash following the lawsuit slammed on the company by the US SEC last week.

The US arm of international crypto exchange Binance has seen a 78% market crash since the United States Securities and Exchange Commission (SEC) sued the company. The company has been struggling to maintain public trust as investors continue to fear for the safety of their funds. According to data from digital assets data provider Kaiko, Binance.US has lost close to 80% of its market strength. Kaiko analyst Dessislava Aubert also confirmed the US market crash to Decrypt, adding that Binance’s parent exchange and Coinbase have seen a more “moderate” decline.

Last week, the SEC sued Binance for multiple alleged offenses, including misappropriating customers’ funds. According to the SEC, Binance illegally misappropriated user funds via Sigma Chain, a separate company allegedly controlled by CEO Changpeng Zhao.

The SEC also said that Binance allowed US customers to trade outside Binance.US. The company’s US arm operates as a separate entity expected to comply with US trading and securities laws. However, the SEC says Binance’s restrictions preventing US customers from trading on Binance international have been negligent. In addition, the SEC says Binance knowingly waived this rule for some “high-value US customers”. According to SEC Division of Enforcement director Gurbir S. Grewal, Binance and Zhao “consciously chose to evade” US laws to maximize profits.

Binance Suffers More Consequences than Market Crash

In response to the SEC’s lawsuit, Binance.US suspended USD deposits from June 13. Following what the exchange describes as “extremely aggressive and intimidating tactics” by the SEC, Binance said it is suspending these deposits to protect customers. In an official tweet, Binance.US said its banking partners would also pause withdrawal channels.

Regardless of the suspension, Binance.US assured that all customer assets are safe and any downtime is likely due to high transaction volumes. Binance also said that it plans to temporarily transition to a crypto-only exchange.

Furthermore, Binance has halted several trading pairs amid its scuffle with the SEC. In an announcement on Monday, Binance announced the suspension of at least 5 ETH-related trading pairs, 4 BUSD pairs, and 10 BNB pairs.

Binance did not explain the suspension. It only specified that the announcement was general and may not affect some users depending on their jurisdictions. Regardless, considering the company’s recent woes, the decision to suspend these pairs is interesting.

As part of the SEC’s lawsuit, the commission added 10 assets to its list of cryptos considered securities. The letter mentioned BNB, ADA, BUSD, MATIC, SAND, COTI, AXS, MANA, SOL, and ATOM. Before now, the SEC had announced it considers several assets as securities, including XRP, TON, DASH, and OMG.

SEC Crackdown Good for DeFi

While Binance.US suffers a market crash amid the SEC crackdown, the DeFi market tells another story. Last week, CoinGecko data showed that the three largest exchanges at the time witnessed a 444% spike in median trading volume within 48 hours. The exchanges, Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum), and PancakeSwap v3 (BSC) recorded a cumulative $792 million rise in trading volume.

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