Binance's Market Share Slips: From 62% to 51%

Binance’s Market Share Slips: From 62% to 51%

Time Stamp: October 27, 2023 4:49 AM
Source Node: 2957249

The
Bloomberg Billionaires Index has revised its revenue estimate for the
cryptocurrency exchange Binance, reducing it by 38% as data showed a decline in
trading volumes this year.

This
revision has had a significant impact on the wealth of Binance’s founder,
Changpeng Zhao, widely known as CZ, whose fortune has been reduced by $11.9
billion, leaving him with a net worth of $17.2 billion.

The
decline in Binance’s fortunes came as trading volumes at the exchange dipped.
CZ’s involvement in recent events further complicated matters. In November, he
announced the liquidation of a token associated with FTX.

The
announcement came after reports emerged that Alameda Research, a hedge fund led
by Sam Bankman-Fried, also held a significant position in it. This news
prompted a rush of FTX customers to withdraw their funds, overwhelming the
exchange, which subsequently declared bankruptcy less than a week later.

As
a result, Sam Bankman-Fried’s personal fortune, which had peaked at $26 billion
in March the previous year, plummeted to zero.

The
Bloomberg Billionaires Index calculates Binance’s revenues using spot and
derivatives trading data from cryptocurrency tracking services Coingecko and
Coinpaprika. Binance gained market share earlier this year.

However,
Binance’s dominance in on-exchange crypto trades slipped from 62% in the first
quarter to 51% by the end of the third quarter, according to research firm
CCData. This drop followed the conclusion of a zero-fee promotion for popular
trading pairs.

In
June, the Securities and
Exchange Commission (SEC) initiated legal action against the exchange,
alleging a lack of adequate money-laundering controls, inflated trading
volumes, and mishandling of client assets. The Commodity Futures Trading
Commission (CFTC) had also previously gone after Binance for failing to
comply with rules allowing U.S. users to access the platform.

Bloomberg’s
wealth index devalued Binance’s U.S. exchange to zero in June when the exchange
announced it would cease dollar transactions, causing a dramatic reduction in
trading volumes.

Earlier
in the year, Binance.US had been valued at $4.7 billion in a funding round
conducted in March 2022. Notably, CZ’s net worth had reached a peak of $96
billion in January of the same year.

The
challenges faced by Binance are not unique, as regulatory uncertainty and
rising interest rates have made other investment options more attractive.
Trading volumes at Coinbase Global Inc. declined by 52% in the third quarter
compared to the previous year, according to data from CCData.

Binance.US Halts Direct USD Withdrawals

Binance.US
has ceased direct US dollar withdrawals due to regulatory actions by the
SEC, Finance Magnates reported
earlier. Users must now convert US
dollars into stablecoins or digital assets for withdrawals, with FDIC insurance
no longer applicable. This policy was introduced in response to ongoing legal
battles involving Binance.US, its parent company Binance, and Founder
Changpeng Zhao against the SEC. In June, Binance.US suspended USD deposits due
to the SEC’s legal actions and pressure on its banking partners, who were
reluctant to engage with the cryptocurrency industry. This suspension came as a
means of safeguarding the platform and its users.

The
Bloomberg Billionaires Index has revised its revenue estimate for the
cryptocurrency exchange Binance, reducing it by 38% as data showed a decline in
trading volumes this year.

This
revision has had a significant impact on the wealth of Binance’s founder,
Changpeng Zhao, widely known as CZ, whose fortune has been reduced by $11.9
billion, leaving him with a net worth of $17.2 billion.

The
decline in Binance’s fortunes came as trading volumes at the exchange dipped.
CZ’s involvement in recent events further complicated matters. In November, he
announced the liquidation of a token associated with FTX.

The
announcement came after reports emerged that Alameda Research, a hedge fund led
by Sam Bankman-Fried, also held a significant position in it. This news
prompted a rush of FTX customers to withdraw their funds, overwhelming the
exchange, which subsequently declared bankruptcy less than a week later.

As
a result, Sam Bankman-Fried’s personal fortune, which had peaked at $26 billion
in March the previous year, plummeted to zero.

The
Bloomberg Billionaires Index calculates Binance’s revenues using spot and
derivatives trading data from cryptocurrency tracking services Coingecko and
Coinpaprika. Binance gained market share earlier this year.

However,
Binance’s dominance in on-exchange crypto trades slipped from 62% in the first
quarter to 51% by the end of the third quarter, according to research firm
CCData. This drop followed the conclusion of a zero-fee promotion for popular
trading pairs.

In
June, the Securities and
Exchange Commission (SEC) initiated legal action against the exchange,
alleging a lack of adequate money-laundering controls, inflated trading
volumes, and mishandling of client assets. The Commodity Futures Trading
Commission (CFTC) had also previously gone after Binance for failing to
comply with rules allowing U.S. users to access the platform.

Bloomberg’s
wealth index devalued Binance’s U.S. exchange to zero in June when the exchange
announced it would cease dollar transactions, causing a dramatic reduction in
trading volumes.

Earlier
in the year, Binance.US had been valued at $4.7 billion in a funding round
conducted in March 2022. Notably, CZ’s net worth had reached a peak of $96
billion in January of the same year.

The
challenges faced by Binance are not unique, as regulatory uncertainty and
rising interest rates have made other investment options more attractive.
Trading volumes at Coinbase Global Inc. declined by 52% in the third quarter
compared to the previous year, according to data from CCData.

Binance.US Halts Direct USD Withdrawals

Binance.US
has ceased direct US dollar withdrawals due to regulatory actions by the
SEC, Finance Magnates reported
earlier. Users must now convert US
dollars into stablecoins or digital assets for withdrawals, with FDIC insurance
no longer applicable. This policy was introduced in response to ongoing legal
battles involving Binance.US, its parent company Binance, and Founder
Changpeng Zhao against the SEC. In June, Binance.US suspended USD deposits due
to the SEC’s legal actions and pressure on its banking partners, who were
reluctant to engage with the cryptocurrency industry. This suspension came as a
means of safeguarding the platform and its users.

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