Binance.US Trades Bitcoin at Discount Amid Legal Woes, Says CTO

  • Bitcoin and other digital assets, including Tether (USDT), are trading at an 8% discount on Binance.US due to the platform's liquidity issues following a lawsuit by the U.S. Securities and Exchange Commission (SEC).
  • After the lawsuit, Binance.US has seen an 80% decrease in market depth as market makers exited the platform. The exchange discontinued U.S. dollar deposits when banking partners halted their payment channels, greatly affecting Binance.US's reputation and reducing its market share to less than 1%.
  • Tether's CTO Paolo Ardoino addressed concerns about USDT deviating from its dollar peg, highlighting that the situation is unique to Binance.US due to its legal challenges. He affirmed that Tether maintains its primary market, but market making on secondary markets like crypto exchanges is the role of arbitrageurs and market-making professionals.

Binance.US, a well-recognized crypto exchange, is witnessing an unusual phenomenon: Bitcoin (BTC) and other digital currencies, including Tether (USDT), are being traded at an 8% discount. This irregularity in price is attributed to liquidity problems following a lawsuit filed against Binance.US by the U.S. Securities and Exchange Commission (SEC). This development has created waves across the crypto markets globally, including South Africa, with investors observing the situation closely.

According to data from Binance.US, Bitcoin is presently trading at around ZAR 520,731 ($27,705.59), approximately ZAR 56,394 ($3,000) lower than the prices on other competing platforms such as Coinbase, Kraken, BitStamp, among others. This decrease is also noticeable in other cryptocurrencies such as Ethereum (ETH), USDT, Solana (SOL), amongst others, as shown in Coingecko data.

The Trouble with Binance.US

On June 5, the SEC initiated legal action against Binance.US, following which the exchange has seen nearly an 80% drop in market depth as market makers exit the platform.

In the aftermath of these legal issues, the exchange suspended U.S. dollar deposits after its banking partners unexpectedly stopped their payment channels, prompting a switch to a crypto-only platform. According to Kaiko, a blockchain analytics firm, this development has dealt a considerable blow to Binance.US’s reputation, and its market share plummeted to less than 1%.

Since these developments, the exchange has faced extreme price volatility with its USD pairs. BTC soared to as high as ZAR 2.6 million ($138,000) on June 21. Prior to this, Bitcoin had traded at a 3% discount in May.

Meanwhile, cryptocurrencies paired with stablecoins like USDT and USDC appear to trade at regular prices, as per data from Coingecko.

Tether’s CTO Speaks on USDT Trading on Binance.US

Tether’s CTO, Paolo Ardoino, addressed concerns regarding the deviation of USDT from its dollar peg. Ardoino highlighted that the divergence is exclusive to Binance.US, where a general -8% spread appears to impact all cryptocurrencies on the platform.

The CTO clarified that the deviation resulted from the ongoing legal challenges faced by Binance.US. Ardoino stated, “Binance.US is going through some legal challenges, so it probably doesn’t have many market makers willing to arbitrage at this moment in time. On USDt is trading 1bps above the dollar.”

He further elaborated, “Tether is in charge of its primary market . Market making secondary markets (crypto exchanges) is the role of arbitrageurs and market-making professionals.”

This scenario has drawn attention from the global crypto community, including South African investors. As the matter evolves, it will be crucial to observe how these developments affect the broader cryptocurrency market and what repercussions they may hold for the future of crypto trading on Binance.US and across the globe.

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