Binance's Market Share Slips: From 62% to 51% amidst Regulatory Pressure

The Bloomberg Billionaires Index has revised its revenue estimate for the cryptocurrency exchange Binance, reducing it 38% as data showed a decline in trading volumes this year.

This revision has had a significant impact on the wealth of Binance's Founder, Changpeng Zhao, widely known as CZ, whose fortune has been reduced $11.9 billion, leaving him with a net worth of $17.2 billion.

Binance's Market Share: From Gain to Decline in 2023

The decline in Binance's fortunes came as trading volumes at the exchange dipped. CZ's involvement in recent events further complicated matters. In November, he announced the liquidation of a token associated with FTX. The announcement came after reports emerged that Alameda Research, a hedge fund led by Sam Bankman-Fried, also held a significant position in it. This news prompted a rush of FTX customers withdrawing their funds, overwhelming the exchange, which subsequently declared bankruptcy less than a week later.

As a result, Sam Bankman-Fried's personal fortune, which had peaked at $26 billion in March the previous year, plummeted to zero.

The Bloomberg Billionaires Index calculated Binance's revenues using spot and derivatives trading data from cryptocurrency tracking services Coingecko and Coinpaprika. Also, Binance gained market share earlier this year.

However, Binance's dominance in on-exchange crypto trades slipped from 62% in the first quarter to 51% by the end of the third quarter, according to research firm CCData. This drop followed the conclusion of a zero-fee promotion for popular trading pairs.

In June, the Securities and Exchange Commission (SEC) initiated legal action against the exchange, alleging a lack of adequate money-laundering controls, inflated trading volumes, and mishandling of client assets. The Commodity Futures Trading Commission previously pursued Binance for failing to comply with rules allowing US users to access the platform.

Bloomberg's wealth index devalued Binance's US exchange to zero in June when the exchange announced it would cease dollar transactions, causing a dramatic reduction in trading volumes. Earlier in the year, Binance.US had been valued at $4.7 billion in a funding round conducted in March 2022. Notably, CZ's net worth had reached a peak of $96 billion in January of the same year.

Binance founder Changpeng Zhao loses $12 billion on crypto-trading slump https://t.co/O5ebizE73U

The challenges faced by Binance are not unique, as regulatory uncertainty and rising interest rates have made other investment options more attractive. Trading volumes at Coinbase Global Inc. declined 52% in the third quarter compared to the previous year, according to data from CCData.

Binance.US Halts Direct USD Withdrawals

Binance.US has ceased direct US dollar withdrawals due to regulatory actions by the SEC, Finance Magnates reported earlier. Users must now convert US dollars into stablecoins or digital assets for withdrawals, with FDIC insurance no longer applicable. This policy was introduced in response to ongoing legal battles involving Binance.US, its parent company Binance, and CZ against the SEC.

In June, Binance.US suspended USD deposits due to the SEC's legal actions and pressure on its banking partners, who were reluctant to engage with the cryptocurrency industry. This suspension came as a means of safeguarding the platform and its users.