The past year brought surprising changes for Binance, considered a giant in the cryptocurrency market. Data from the Paris-based analytics platform Kaiko reveal that Binance’s market share has fallen to 44.5%. This is a significant turnaround after a three-year period of growth, during which the company’s share jumped from 22% in 2020 to a peak of 60% in 2022.
This decline is rooted in regulatory challenges that Binance has faced in various jurisdictions. In 2023, due to problems with complying with local regulations, the exchange withdrew from markets such as Canada, the United Kingdom, and a number of European countries, including Austria, Cyprus, and the Netherlands. However, the biggest blow to its market position was dealt by the United States.
U.S. federal agencies, including the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department, and the Office of Foreign Assets Control (OFAC), brought legal actions against Binance. The U.S. Department of Justice accused the company of prioritizing growth and profits over compliance with American law.
As a result of these actions, Changpeng Zhao, CEO and co-founder of Binance, resigned from his position, and the company agreed to record settlements of $4.3 billion with U.S. authorities. Zhao is currently awaiting trial in the U.S. on charges related to operations on the trading platform.
Additionally, the U.S. Securities and Exchange Commission (SEC) continues to pose a significant challenge to Binance, accusing the exchange of, among other things, listing unregistered securities, commingling assets, and market manipulation. The SEC also classified cryptocurrencies associated with Binance, such as BNB and stablecoin BUSD, as securities.
Despite these difficulties and the decline in market share, Binance continues to attract new users. In 2023, the company gained 40 million new customers, increasing its global user base to 170 million. Binance also invested over $200 million last year to strengthen its regulatory compliance efforts.
While the situation of Binance reflects the complexities and regulatory challenges in the world of cryptocurrencies, it remains a key player in the market. The future of this giant will certainly be an interesting topic to observe for both cryptocurrency enthusiasts and the entire financial sector.
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