Binance.US has seen its market depth decline by a substantial 78% across its top 25 cryptocurrency assets in wake of an unprecedented lawsuit filed by the SEC against the exchange and its CEO Changpeng Zhao last week.
Following the lawsuit announcement, Binance.US witnessed an immediate exit of market makers from its platform, which has been identified as the primary reason for the reduced market depth.
Market makers play a crucial role in providing liquidity as they quote bid and ask prices. The sudden withdrawal of those market makers from Binance has left the platform grappling with limited liquidity, making order execution progressively difficult for traders. As a result, traders who heavily rely on robust liquidity to execute trades have been significantly impacted; moreover, with less buy and sell orders available for traders, they may soon face problems with reaching opportune trade execution prices.
The SEC’s lawsuit against Binance involves several alleged violations of US securities laws; however, the crypto exchange has vowed to robustly defend itself against these allegations.
According to data from crypto analytics firm Nansen, Binance has seen over $2.5 billion in net outflows in the week following the lawsuit announcement, while Binance.US has reportedly experienced an outflow of over $112 million during the same period.
Information for this briefing was found via Kaiko Data and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.