The plunge comes seven days after the SEC filed a lawsuit accusing the exchange of violating securities law, among other serious charges.
Binance.US, the American sister site of crypto exchange Binance, has had a rough ride over the past few weeks. On June 5, the SEC filed a lawsuit against the exchange for alleged violations of securities law, driving liquidity on Binance.US down by a whopping 78%.
Data from crypto data firm Kaiko shows that market makers began exiting the platform on June 5, triggering an exponential drop in liquidity between June 6 and 8.
Kaiko Data stated on Twitter that “Binance.US market depth is down a whopping 78% since the SEC lawsuit. Market makers vacated instantly, leaving hardly any liquidity”.
On June 8, Binance.US also announced the suspension of US dollar deposits and notified customers that its banking partners were preparing to pause fiat dollar withdrawal channels as early today, June 13.
The exchange claimed the SEC has resorted to intimidation and aggression in its pursuit of an “ideological campaign against the American digital asset industry”. “Our business partners have not been spared in the use of these tactics,” it stated, “which has created challenges for the banks with whom we work.”
Binance.US will also start to delist USD pairs such as BTC-USD this week, further contributing to a liquidity squeeze.
The SEC v. Binance lawsuit is ongoing, but Binance finds itself in increasingly hot waters. On Sunday night, John Reed Stark, a former chief of the SEC Internet Enforcement division, claimed that the US Department of Justice will file, or has already filed, a Binance-related criminal indictment.
The SEC has listed 13 charges against Binance and its CEO Changpeng Zhao, but some of the most serious allegations include money laundering and market manipulation. The complaint alleges that Zhao comingled billions of dollars in customers’ funds for his own benefit, and that he used a firm to inflate Binance’s value, causing extensive market manipulation.
Binance.US will now focus on operating as a “crypto-only” exchange, with crypto trading, staking, deposits and withdrawals operating as normal.
The exchange stated: “Until we secure more stable banking partners, Binance.US will remain a crypto-only exchange – at least for a time.”
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