Binance.US Market Depth Plummets 78% Following SEC Lawsuit

Market makers exit Binance.US platform, sparking liquidity concerns.

Binance.US has seen a sharp drop of 78% in market depth for the top 25 crypto assets since the Securities and Exchange Commission filed a lawsuit against Binance, Binance.US and CEO Changpeng Zhao on June 5.

The main cause of this drop is the quick exit of market makers from the Binance.US platform following the lawsuit, as reported by crypto data firm Kaiko cited by The Block. This has led to concerns about liquidity and questions about the future of the exchange.

https://t.co/pup2WYms9R market depth is down a whopping 78% since the SEC lawsuit 👀

Market makers vacated instantly, leaving hardly any #liquidity. pic.twitter.com/EvoO778mAy

— Kaiko (@KaikoData) June 12, 2023

Market depth is an important measure of liquidity and the depth of order books. It refers to the volume of buy and sell orders at different prices. A decrease in market depth means reduced liquidity and potential difficulties for traders in executing orders. Market makers play a vital role in providing liquidity by quoting bid and ask prices. Their sudden exit has left Binance.US with limited liquidity, making it harder for traders to execute orders effectively.

The significant drop in market depth is a concern for traders who depend on strong liquidity to execute trades. With fewer buy and sell orders available, traders may experience increased slippage and difficulty in getting their desired trade execution prices. The lack of liquidity may also reduce the overall efficiency and appeal of the exchange, potentially harming its reputation and ability to attract users.

Last week, the SEC sued Binance over several alleged violations of U.S. securities laws. Binance said it would vigorously defend itself against these allegations. According to crypto analytics provider Nansen, over $2.5 billion in net outflow has left Binance in the past seven days, along with over $112 million from Binance.US. However, Binance CEO Changpeng Zhao disputes these figures.