Bitcoin (BTC) and other digital assets, such as Tether (USDT), are currently trading at an 8% discount on Binance.US, attributed to liquidity issues caused by a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). This situation has resulted in BTC trading at $27,705.59 on Binance.US, which is around $3000 less than its value on rival platforms like Coinbase, Kraken, BitStamp, and others. Similarly, other digital assets like Ethereum (ETH), USDT, Solana (SOL), and others are also facing this discount, as indicated by Coingecko data.
Since the SEC filed a lawsuit against Binance.US on June 5, the exchange has experienced a significant decrease in market depth as market makers have exited the platform. This decline amounts to almost 80%. Additionally, the exchange had to discontinue U.S. dollar deposits after its banking partners abruptly halted their payment channels and switched to a crypto-only platform. Due to these events, Binance.US’s market share fell to less than 1%, significantly tarnishing its reputation, according to data from blockchain analytical firm Kaiko.
High Volatility and Discount in BTC Price
Following the legal challenges, Binance.US has witnessed high volatility in its USD pairs. On June 21, BTC spiked to as high as $138,000, reflecting this instability. Prior to that, Bitcoin had already traded at a 3% discount in May. Interestingly, assets paired with stablecoins like USDT and USDC are trading at regular prices, mitigating the impact of the discount. Nevertheless, it is important to note that this deviation in USDT’s value is unique to Binance.US, indicating that the -8% spread affects all cryptocurrencies on the platform.
Addressing concerns about USDT deviating from its dollar peg, Tether CTO Paolo Ardoino clarified that this situation is exclusive to Binance.US. He suggested that Binance.US is currently facing legal challenges, leading to a reduction in market makers willing to engage in arbitrage activities. In contrast, on Binance.com, the exchange’s primary market, USDT is trading 1bps above the dollar. Ardoino emphasized that Tether maintains control over its primary market.
Binance.US is facing significant liquidity issues and a decrease in market depth due to the legal challenges brought forth by the SEC. As a result, Bitcoin and other digital assets are trading at an 8% discount compared to other platforms. However, this discount is not affecting stablecoin pairs. It remains to be seen how Binance.US will navigate through these challenges and whether it can regain its market share and reputation in the future.
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