SEC Lawsuit Binance US: Binance.US sees 78% decline in market depth following SEC lawsuit

SEC lawsuit Binance US caused the market depth of the leading 25 cryptocurrencies on the platform has plummeted significantly, experiencing a staggering 78% decline.

SEC Lawsuit Binance US: Binance.US sees 78% decline in market depth following SEC lawsuit

Following the Securities and Exchange Commission’s lawsuit against Binance.US and its CEO Changpeng Zhao on June 5, the platform has experienced a significant and alarming decrease in market depth across the top 25 cryptocurrencies. This decline amounts to a staggering 78% since the announcement of the lawsuit.

The departure of market makers from the Binance.US platform, triggered by the legal action, is considered the primary reason for the plummeting market depth.

This has raised concerns about liquidity and cast doubts on the exchange’s future. Kaiko, a crypto data firm, has highlighted the swift exit of market makers as a crucial factor contributing to the decrease in market depth.

Market depth refers to the volume of buy and sell orders at various price levels and serves as a key metric for measuring liquidity. A reduction in market depth implies diminished liquidity and potential challenges for traders trying to execute orders effectively.

Market makers play a crucial role in providing liquidity by quoting bid and ask prices. Their sudden departure has resulted in limited liquidity on the Binance.US platform, making it increasingly difficult for traders to execute orders efficiently.

The significant decline in market depth raises concerns for traders who rely on robust liquidity to facilitate trades. With the decreased availability of buy and sell orders, traders may experience increased slippage and encounter difficulties in obtaining desired execution prices.

The lack of liquidity also poses risks to the overall efficiency and attractiveness of the exchange, potentially further damaging its reputation and ability to attract users.

In response to the SEC’s allegations of violations of U.S. securities laws, Binance has stated its intention to vigorously defend itself.

However, crypto analytics provider Nansen reports a net outflow of over $2.5 billion from Binance and more than $112 million from Binance.US in the past week, contradicting Binance CEO Changpeng Zhao’s dispute of these figures.

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