Binance Bus: Roaming Through a Rocky Road

PAID NETWORK
8 min readAug 11, 2023

Introduction

Let’s talk about Binance, the heavy hitter in the world of cryptocurrencies. The exchange has had a difficult time of it as of late, with some significant setbacks. They’ve had a few execs leaving, some regulatory hurdles, and even saw some significant plunges in their market share. To put it mildly, they’ve been through quite the ordeal!

Binance is no stranger to adversity, so perhaps they will devise a cunning plan to get over this rough patch. So, how do these recent developments impact the exchange in thriving in the bustling world of crypto?

Binance’s Regulatory Odyssey

Binance has been engaged in a difficult legal battle with US regulators for the entirety of just this year alone. The regulators have been claiming infractions from the exchange.

Last March 27, the CFTC stunned Binance, accusing the exchange of offering crypto derivatives like futures and options contracts to US residents without playing by the registration rules. Bitcoin, ether, and litecoin were among the assets involved.

Binance, has long been aware of its defiance of CFTC regulations, cunningly maneuvering to maintain a steady stream of funds while evading the clutches of compliance, according to the outspoken CFTC Chairman Rosnim Behnam. According to Gretchen Lowe, the deputy director of the CFTC’s enforcement division, Binance’s compliance efforts were nothing but a facade. Time and time again, Binance made a conscious decision to prioritize profits over obeying the law.

Just less than three months after the CFTC lawsuit, US Securities and Exchange Commission filed another bombshell against the exchange. Binance, Binance US, and CZ reportedly dealt unregistered securities. BAM Trading, the operator of BinanceUS, faced accusations of failing to register as a broker, clearing agency, and exchange. FTX, Binance, and CZ faced accusations of a “web of deception” and mingling customer funds.

The complaint additionally alleges that Binance deceived investors regarding the effectiveness of its systems in detecting and preventing manipulative trading. It also claims that Binance misrepresented its efforts to limit trading for users in the U.S. on its global platform.

Overall, the S.E.C. has unleashed a whirlwind of 13 charges against Binance and C.Z. himself. Seeking justice vs Binance, the SEC aims to prevent CZ from holding any position of authority in US-based entities that deal with securities.

In a parallel move, the CFTC is determined to permanently ban CZ from engaging in any business activities within its realm of authority. It seems the agency is determined to exile Binance from the United States for good.

A Series of Exodus

Binance, on its journey to becoming a global crypto exchange, encountered a few bumps along the way. Over a span of four months, it exited certain markets due to regulatory adjustments and licensing hurdles.

On May 12 of this year, Binance has made the announcement that it will terminate its operations in Canada, citing the difficult regulatory climate as the reason. On Twitter, the cryptocurrency exchange made the following statement regarding the impending change: “Binance will be joining other prominent crypto businesses in proactively withdrawing from the Canadian marketplace.” Binance also noted that new instructions about stablecoins and investor limits “makes it no longer tenable for Binance to operate in the Canada market at this time.”

In February, the Canadian Securities Administrators (CSA) unleashed new guidelines that put the brakes on crypto asset trading platforms in Canada. The rule was clear: no more buying or depositing stablecoins without the CSA’s stamp of approval. To gain approval, the crypto trading platform must successfully navigate the CSA’s rigorous due diligence checks.

Last month, Binance announced its farewell to the Netherlands as their efforts to secure a virtual asset service provider (VASP) license, a testament to an entities’ commitment to anti-money laundering (AML) guidelines, fell short of convincing the Dutch regulator.

Since July 17, 2023, only Dutch residents who are already Binance users can withdraw their funds as there will be a complete shutdown of all financial transactions. In line with this, Binance has reached an agreement with Coinmerce to refer its users.The Dutch crypto exchange announced on July 6 that Binance would be referring hundreds of thousands of users from the Netherlands. This referral would allow users to transfer their digital assets to Coinmerce without any fees.

Recently, Binance has decided to abandon its efforts to obtain a license from the Austrian Financial Market Authority. According to a report by FinanceFWD, information obtained from sources with direct knowledge of the situation reveals that CZ’s exchange withdrew its application to operate in Austria some time ago.

Goodbye to more Execs

However, Binance also saw exodus from its executives. General counsel Hon Ng, Chief Strategy Officer Patrick Hillmann, and Senior Vice President for Compliance Steven Christie, have decided to leave Binance. Their resignation comes shortly after that of Matthew Price, a former IRS agent whom Binance hired in 2021 to handle worldwide investigations and intelligence. Price left the company earlier this month.

The executives reportedly left because of Zhao’s response to a Justice Department inquiry. However CZ denied the allegations. Following this, the exchange’s Chief Strategy Officer Patrick Hillmann announced through Twitter that he was leaving for personal reasons. Steven Christie, a compliance executive who had been with the company since May 2022, announced his departure on Twitter on Friday, citing exhaustion and the need to shed some pounds as reasons for his departure.

Smaller Pie for Binance

Binance’s spot market share took a dip in June, falling to 41.9% from the previous month’s 43%. This marks the fourth consecutive monthly decline for the exchange, reaching its lowest level since August 2022, as reported by CCData.

The market share of Binance has dropped to 73% in mid July from 90% at the beginning of the year, based on spot trading volume data from Kaiko. Meanwhile, OKX’s share rose to 11%, nearly doubled from January. Huobi and Bybit have also increased their market share, now representing 9% and 7%, respectively, of global spot crypto trading volume.

Binance.US imarket share plummeted from a towering 22% in April to a mere 0.9% by June 26. Coinbase, the largest US crypto exchange, faced a slight decline in market share. It dropped from 56.5% to 51% in late June after being sued by the SEC.

Nigeria’s SEC Advises Against Binance Trading

Nigeria’s SEC cautions investors about Binance, a major global crypto exchange. Referring to the previous circular, it addresses a fraudulent company unlawfully utilizing the Binance brand. SEC warns against investing with Binance. The agency claims the platform lacks a license and operates illegally in the country. It serves as a reminder of the significant risk and potential for complete investment loss.

“The Commission again reiterates that the activities of Binance, https://www.binance.com and any such other platform through which the Company solicits investors is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal,” the July notice said.

The second warning echoes the June order to stop soliciting investors in Nigeria from “platform providers.” We acknowledge the circular, but the entity mentioned is not associated with us. Binance is seeking clarity from the Nigerian SEC and is committed to working cooperatively with them on the next steps.

Is there a Silver Lining?

Despite the recent rough road traversed by Binance, it is imperative to acknowledge the positive and promising developments that continue to unfold within the crypto space that involves the crypto giant.

Just recently, Ripple landed a milestone victory over the SEC with the ruling stating that XRP is not a security, translating to Ripple Labs Inc not violating any federal securities law by selling its XRP token on public exchanges.

This ruling and clearer definition for security tokens is huge for companies like Binance and Coinbase with lawsuits concerning the sale of securities. This could mean a reconsideration of the initial lawsuit to accommodate Ripple’s recent victory, Indeed, a very welcoming sign for the crypto industry.

Moving forward, according to a press statement dated July 13, Binance has announced that Eleanor Hughes will take over as the company’s new general counsel effective immediately. Hughes made her debut at Binance in November 2021, and shortly afterward, she was promoted to the position of Head of Law for the APAC and MENA regions.

She was instrumental in the success of the exchange’s efforts to get operational licenses in a number of countries throughout the two areas, including Dubai and Bahrain, amongst others. In light of the regulatory activities of the exchange, which have not been proceeding smoothly in key areas like Europe and the United States, it is possible that her performance in both regions was a factor in her promotion to lead those efforts globally.

In addition, despite a recent decline, Binance’s market share is a sizable portion of the industry overall, giving it a significant advantage over its rivals. This could imply that investors and the cryptocurrency market as a whole favor Binance over other exchanges despite the latter’s persistent problems; thus, this would translate to the cryptocurrency industry’s confidence in Binance over the long haul.

Moving to Southeast Asia, Binance was granted its first license in the region last May when the Securities and Exchange Commission of Thailand approved a joint venture between Binance and Gulf Energy Development to operate a digital asset exchange and brokerage.

Recently, Binance has introduced a digital asset exchange for Kazakh citizens. A permanent license to provide a digital asset platform and custodial services, as well as an initial license to operate in Kazakhstan starting August, were granted to the cryptocurrency exchange.

Conclusion

Binance’s year has been a rollercoaster ride, with regulatory hurdles, key departures, and a shrinking market presence. Despite some setbacks, the company has taken positive steps by bringing on a new general counsel and obtaining operational licenses in crucial markets. The future impact of these developments on Binance is uncertain, yet the company has a resilient track record.

Despite the hurdles, Binance possesses strengths that can conquer them. The company boasts a powerful brand and a vast user base. With a proven history of innovation, this company consistently creates cutting-edge products and services. With continued innovation and user growth, Binance can keep going forward at speed.

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