Kaiko, the digital asset data provider, recently reported that Binance’s spot market share has significantly decreased over the past week.
Despite starting the year off strong and becoming the market leader with over 70% share by the end of 2022, Binance was unable to maintain its position for long. Experts at Kaiko suggest that US financial regulators played a crucial role in Binance’s fall.
The New York City Department of Financial Services ordered the issuance of Binance’s own stablecoin, BUSD, to be stopped, while the Securities and Exchange Commission issued a warning to stablecoin issuer Paxos regarding its operations.
The recent Commodity Futures Trading Commission lawsuit against Binance and its CEO Changpeng Zhao has also contributed to the outflow of funds from the exchange.
Kaiko analysts believe that it will be challenging for Binance to regain its dominant position in the near term, as the CFTC investigation could drag on for years.
As a result, other popular crypto exchanges like Bybit, Deribit, or OKX may attract customers to their platforms and capture some of Binance’s derivatives volume.
Another lawsuit, this time for approximately $1 billion, has been filed against Binance and its founder in the Florida Southern District Court by Moscowitz and Boies Schiller Flexner.