- The SEC’s case against Binance has significantly affected Binance.US.
- Popular crypto assets are trading at a discount on the exchange.
- Despite the discount, arbitrageurs have little avenue to profit due to another case fallout.
In June, the United States Securities and Exchange Commission filed a lawsuit against Binance, the world’s largest crypto exchange, its U.S. affiliate (Binance.US), and its founder Changpeng “CZ” Zhao.
Binance.US’ business has been put under significant strain after the lawsuit. First, the exchange lost a major banking partner and was forced to transition to a crypto-only model on June 9. Secondly, it reportedly laid off about 10% of its staff to cover legal fees on June 16.
Now, market makers appear to have fled as major crypto asset prices are disconnected from the broader market.
Bitcoin and Tether Trading at 8% Discount
As many market participants observed on Monday, July 10, digital assets like Bitcoin and Tether’s USDT are trading at an 8% discount on Binance.US.
At the time of writing, BTC is trading at around $27,668.96 on the crypto exchange compared to $30,300 on mainstream exchanges and USDT for $0.9132, below its dollar peg per data from CryptoCompare.
Pushing back against claims of a USDT de-pegging, Tether Chief Technology Officer Paolo Ardoino argued that the most likely reason for the price discrepancies was the unwillingness of market makers to arbitrage due to the firm’s legal battle with the SEC.
In June, crypto data firm Kaiko revealed that Binance.US’ market depth was down 78% since the SEC lawsuit. Market makers vacated instantly, leaving hardly any “liquidity,” the firm noted.
Binance.US has yet to respond to a request for comment.
Sponsored
Despite the attractive price discounts, it bears mentioning that arbitrageurs can scarcely take advantage of the opportunity as the exchange no longer supports fiat deposits as part of its transition to a crypto-only model. On the other hand, it could adversely affect users looking to withdraw holdings in fiat before the July 20 deadline.
On the Flipside
- Binance’s Australian exchange experienced a similar issue in May.
- Users can still get the true value of their assets by withdrawing to other platforms where they can be traded at full value.
- Binance.US hired a bankruptcy specialist as part of recent legal hires.
Why This Matters
The departure of market makers from Binance.US and the effect on markets within the crypto exchange further highlight the strain the SEC case is having on the crypto exchange.
Read this to learn more about Binance.US’ recent string of layoffs:
Binance.US Forced to Lay Off Staff as SEC Case Gathers Momentum
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