Binance, the world’s largest cryptocurrency exchange, faced regulatory pressures from various countries last year, resulting in a continuous decline in market share. However, recent data suggests that funds are flowing back into the exchange. Since reaching an agreement with US regulators on November 21, 2022, Binance has seen a net inflow of funds totaling $4.6 billion, surpassing its competitors.
In November last year, Binance reached a settlement agreement with the US Department of Justice, the Commodity Futures Trading Commission (CFTC), and other institutions. The exchange admitted guilt and agreed to pay a $4.3 billion fine. Binance founder Changpeng Zhao also admitted to violating US anti-money laundering laws and stepped down as CEO.
Under regulatory pressure, Binance’s market share has been declining since February last year, with many users turning to other centralized exchanges. In December last year, Binance’s spot trading volume market share dropped to 38.45%, a significant decrease from 62.25% in February, representing a nearly 38% decrease in market share.
However, funds seem to be flowing back into Binance. According to Defilllama data, since reaching an agreement with US regulators on November 21 last year, Binance has seen a net inflow of $4.6 billion, far surpassing its competitors such as OKX with $2.6 billion and Bybit with $1.1 billion. In January alone, Binance attracted $3.5 billion in fund inflows, surpassing any monthly inflow since November 2022.
These fund inflows are good news for Richard Teng, who took over as CEO of Binance after Changpeng Zhao stepped down. After experiencing a year of declining market share and fund outflows, Binance’s spot market share has stabilized since December last year, following a continuous decline for nine months. Additionally, the price of Binance’s platform token BNB has increased by nearly 40% since November 21 last year, 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 many 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, despite the influx of funds, Binance still faces regulatory pressures from multiple countries. It currently operates without official licenses in major cryptocurrency centers such as Singapore, Dubai, and Hong Kong, and is also facing a lawsuit from the US Securities and Exchange Commission (SEC).
Last year, Binance faced setbacks in Australia, Belgium, and other countries due to operating without licenses. More recently, it faced another setback in India, where authorities accused Binance and other overseas exchanges of engaging in illegal operations. As a result, the apps of Binance and nine other mainstream cryptocurrency exchanges have been removed from India’s Apple App Store.
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