Binance, the world’s largest cryptocurrency exchange, faced regulatory pressure from various countries last year, leading to a decline in market share. However, recent data shows that funds seem to be flowing back into the exchange. Since reaching an agreement with US regulatory authorities on November 21, Binance has seen a net inflow of funds amounting to $4.6 billion, surpassing its competitors.
Last year, Binance faced a series of regulatory hurdles and ultimately reached a settlement agreement with the US Department of Justice, the Commodity Futures Trading Commission (CFTC), and other institutions. The company admitted guilt and agreed to pay a $4.3 billion fine. Binance’s founder, Changpeng Zhao, acknowledged charges of violating US anti-money laundering laws and stepped down as CEO.
As a result of regulatory pressure, Binance’s market share has been declining since February of last year, with many users turning to other centralized exchanges. In December, Binance’s spot trading volume market share dropped to 38.45%, compared to a significant decline from 62.25% in February, evaporating nearly 38% of its market share.
However, funds appear to be flowing back into Binance. Data from Defilllama shows that since the agreement with US regulatory authorities on November 21, Binance has seen a net inflow of funds amounting to $4.6 billion, surpassing its competitors such as OKX with $2.6 billion and Bybit with $1.1 billion. In January alone, Binance attracted a capital inflow of $3.5 billion, surpassing any monthly inflow since November 2022.
These fund inflows are good news for Richard Teng, who took over as CEO of Binance after Zhao resigned. Binance experienced a challenging year in terms of market share erosion and capital outflow. However, after nine consecutive months of decline, its spot market share has stabilized since December.
Binance’s platform token, BNB, has also seen a nearly 40% increase in price since November 21, outperforming Bitcoin’s 15% increase during the same period.
To a large extent, Binance has benefited from the recovery of the cryptocurrency market. Despite facing multiple challenges, traders are still transferring funds to Binance. According to the settlement agreement, Binance must establish a global headquarters, appoint a board of directors, and appoint an independent supervisor for a three-year term.
However, Binance still faces regulatory pressure from various countries. The exchange currently lacks official licenses in major cryptocurrency centers such as Singapore, Dubai, and Hong Kong. It is also facing a lawsuit from the US Securities and Exchange Commission (SEC).
Last year, countries like Australia and Belgium took action against Binance’s unlicensed operations. Recently, Binance faced another setback in India, where authorities accused the exchange and several other overseas exchanges of illegal operations. As a result, the apps of nine mainstream cryptocurrency exchanges, including Binance, were removed from India’s Apple App Store.
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