Binance.US Market Depth Plunges By 78% After SEC Lawsuit

The decline is reported to have dropped by 78% since the announcement of the Securities and Exchange Commission’s lawsuit brought against it, Binance, and CEO Changpeng Zhao on June 5. The lawsuit has sparked concerns about liquidity and raised questions about the future of the exchange.

https://t.co/pup2WYms9R market depth is down a whopping 78% since the SEC lawsuit ?

Market makers vacated instantly, leaving hardly any #liquidity. pic.twitter.com/EvoO778mAy

— Kaiko (@KaikoData) June 12, 2023

According to crypto data firm Kaiko, the primary reason behind the plummeting market depth can be attributed to the swift departure of market makers from the Binance.US platform in the wake of the lawsuit. Market makers are crucial in providing liquidity by quoting bid and ask prices. Their sudden departure has left Binance.US with limited liquidity, making it increasingly challenging for traders to execute orders effectively.

The significant decline in market depth raises concerns for traders who rely on robust liquidity to execute trades. With the reduced availability of buy and sell orders, traders may face increased slippage and potential difficulties in obtaining desired trade execution prices. These difficulties may also undermine the overall efficiency and attractiveness of the exchange, potentially further damaging its reputation and ability to attract users.

The SEC sued Binance last week over several alleged violations of U.S. securities laws, which the exchange said it would defend vigorously. However, according to crypto analytics provider Nansen, over $2.5 billion in net outflow has left Binance during the past seven days — plus over $112 million from Binance.US. The significant outflow of funds may be attributed to the lawsuit, which has led to concerns about the future of the exchange.

Despite the significant decline in market depth, Binance CEO Changpeng Zhao disputes the reported figures. The CEO has stated that the exchange will defend its platform vigorously and has expressed confidence in its ability to overcome the recent challenges. It remains to be seen how the exchange will fare in the coming months, but it is clear that the recent developments have raised concerns about its future prospects.

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