Binance, the world's largest crypto exchange by volume, has seen a significant drop in market share due to accusations of fraud by a U.S. regulator and the elimination of zero-fee trading for some trading pairs. Its market share relative to other exchanges has fallen to 54% from 70% in the past two weeks, the lowest sustained market share since August, according to data from research platform Kaiko. The U.S. Commodity Futures Trading Commission (CFTC) sued the exchange and founder Changpeng Zhao on March 27 for offering unregistered crypto derivatives products in the U.S. against federal law. The U.S. market is particularly fragile right now for remaining crypto exchanges due to increased regulatory scrutiny. In the U.S., Coinbase also saw its market share drop in Q1, while Binance.US picked up the slack, surging from 8% to 24%, according to Kaiko.

Over the past two weeks, Binance has lost 16% market share of trade volume following a CFTC lawsuit and the decision to end its zero-fee trading program.

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U.S. Government Sold $216M of Seized Silk Road Bitcoin This Month; BUSD Trading Temporarily Halted by Binance.US After CFTC Allegations

Binance US temporarily halted trading of BUSD (Binance USD) after allegations from the Commodity Futures Trading Commission (CFTC) that Binance had engaged in illegal activities. The allegations relate to Binance's failure to register with the CFTC as a derivatives exchange, and the trading of futures contracts without proper authorization.

Former CEO of Binance US, Catherine Coley, has hired an attorney to advise her regarding the Commodities Futures Trading Commission's (CFTC) lawsuit against Binance, according to an anonymous source. Coley is said to have hired James McDonald, a partner at Sullivan & Cromwell who previously worked as the director of enforcement at the CFTC.

On-chain data firm CryptoQuant has analyzed Binance's health after the US CFTC lawsuit accused the exchange and its CEO CZ of violating crypto trading and derivatives rules. The analysis found that Binance's Bitcoin and Ethereum reserves remained healthy and even increased from December levels. Binance's net outflows of Bitcoin, Ethereum, and stablecoins have also remained within historical ranges, with recent Bitcoin outflows relatively low compared to earlier events. Bitcoin and Ethereum prices are trading above $28,000 and $1,800 respectively amid positive sentiment in the market.

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Binance, one of the largest centralized cryptocurrency exchanges globally, has around 0.67 million users in the US as of February 2023.

Binance saw about $627 million in net Ethereum-related withdrawals in the 24 hours through Tuesday morning, following the Monday lawsuit filed by the Commodities Futures Trading Commission against the world’s largest cryptocurrency exchange for alleged violations of derivatives rules. Binance held about $64 billion worth of assets in publicly disclosed wallets as of Wednesday morning, according to Nansen data. For the seven days through Tuesday morning, the data showed Binance had $2.1 billion in net withdrawals of Ether and Ethereum-related assets. However, the withdrawals are significantly lower than what the exchange experienced in December when daily outflows at one stage surged to $3 billion following the collapse of the FTX exchange amid fraud allegations. Binance also saw $2.3 billion in stablecoin outflows on Feb. 13 after the New York Department of Financial Services ordered Paxos to stop issuing Binance USD (BUSD) stablecoin. (forkast)