The majority of the recent surge in digital assets has not been reflected in Binance’s BNB token, indicating a difficult future ahead for the biggest cryptocurrency exchange following its guilty plea to US charges and $4.3 billion fine.
With cryptocurrency derivatives, the tide is turning. According to CCData, the exchange’s percentage of spot trade volumes fell from 55% at the beginning of 2023 to 32% in November. Its market share in derivatives fell from almost 60% to 48%.
After the plea agreement with US authorities, “we expect Binance to lose its throne as the No. 1 centralized exchange by volumes,” stated Matthew Sigel, head of digital-assets research at fund manager VanEck. He continued, saying that rivals Bitget, Coinbase, Bybit, and OKX might take the top spot.
Aside from entering a guilty plea, Binance’s founder, Changpeng Zhao, also tendered his resignation as CEO as part of the agreement with US authorities. Richard Teng, a former civil servant who now works in the cryptocurrency industry and succeeds Zhao, has the difficult job of turning the company around to prevent regulatory fallout while also halting the company’s market share decline.
In an interview conducted last month, Teng attempted to convey the company’s strength by stating that revenues and earnings are still high at Binance. He is under pressure to name a board of directors, choose a formal headquarters, and increase the company’s financial transparency.
Binance did not respond to a request for comment regarding BNB’s performance and the company’s business prospects.
DefiLlama data shows that customers withdrew a net $1.6 billion from Binance in November, the second-highest monthly outflow of the year. A portion of that has changed, with a total of $398 million coming onto the exchange in December.
Since the US guilty pleas and more than $4 billion fine—among the largest in US history—BNB has decreased by roughly 8%. During the same time frame, an index of the top 100 digital assets increased by about 14%.
According to Clara Medalie, director of research at Kaiko, “BNB is being treated as a proxy for Binance right now, which explains its strong underperformance.”
Longer time horizons have seen BNB outperform; for example, within the last three years, it has increased by roughly 686% while the index of the top 100 tokens has increased by 122%.
Binance is benefiting from the resurgence in digital asset prices this year, following a 2022 decline. Hopes that the worst of the US crackdown on cryptocurrencies may have passed have also been stoked by the plea agreement and Sam Bankman’s fraud at FTX.
Although “Binance remains operational and there’s at least a path forward,” according to Annabelle Huang, managing partner at cryptocurrency lender Amber Group, “the US settlement certainly had an impact on the BNB price.”