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Changpeng Zhao Crimes Blamed for Sixth State Delicensing Binance.US, Who Will Fill Market Gap Left By CEX? 

Last Updated May 2, 2024 3:55 PM
Shraddha Sharma
Last Updated May 2, 2024 3:55 PM

Key Takeaways

  • Oregon State has become the latest state to deny operations to Binance.US.
  • Legal troubles for Binance stem from former CEO Changpeng Zhao’s arrest. 
  • Other exchanges like Bybit and OKX are gaining market share with Binance’s decline. 

Binance is facing challenges that threaten its operational stability in the United States. The State of Oregon is reportedly the sixth state to revoke the exchange’s license, following the guilty plea of former CEO Changpeng Zhao. As the platform loses licenses to operate, other exchanges seem to be gaining ground. 

State Licensing and Footprint of Binance.US

Binance.US is licensed to operate in numerous states across the United States as a separate legal entity from Binance. BAM Trading Services as the local arm is reportedly losing licenses with Oregan the latest state. 

According to the Binance.US website , the platform faces restrictions in 9 states, including Alaska, Hawaii, Maine, New York, and Texas, where it is currently unavailable to residents. 

A total of 7 states—Connecticut, Florida, North Carolina, Ohio, Minnesota, Georgia, and now Oregon—have temporarily paused new user onboarding, though existing customers can continue operations.

Oregan’s decision followed the guilty plea of Changpeng Zhao for felony charges related to anti-money laundering and sanctions law violations.  The former Binance CEO has been sentenced to 4 months in jail. 

Oregon’s Division of Financial Regulation cited the severity of these felonies as the primary reason for the revocation, highlighting the increasing intolerance of regulatory bodies towards compliance failures in the crypto space.

The press release noted , “Following Zhao’s felony pleas, Alaska, Florida, Maine, and North Carolina have also revoked, or denied the renewal of, Binance.US‘s money transmission licenses in those jurisdictions.”

From the above-mentioned statesFlorida , Alaska, and North Carolina suspended  the Binance license in January, followed by Maine choosing not to renew it. 

Binance.US notes on its website that it secured money transmitter licenses in multiple states including but not limited to Alabama, Arizona, Arkansas, Delaware, the District of Columbia, Florida, Georgia, etc. The extensive list covered at least 37 states where Binance.US held a Money Transmission License.

Platform’s Market Share in Danger?

The legal repercussions of Zhao’s arrest are consequential. 

Binance market share and trust score have taken a hit after CZ’s guilty plea in November. Once a leader in the crypto exchange market, Binance now stands 10th on the CoinGecko leaderboard while Binance.US is one slot ahead based on trust score. The trust score covers a range of exchange metrics.

Top Crypto Exchanges on CoinGecko
Top Crypto Exchanges on CoinGecko

A high trust scores indicate user confidence, liquidity, and operational success. Both exchanges have seen a decrease in volumes and user trust. Binance.US has a 10 trust score but the 24-volume is under $17m. Binance has a 9 trust score with a 24-trading volume under $11b. Competing exchanges such as Bybit, OKX, and Coinbase have capitalized on this shift, with increases in both trading volumes and monthly visits.

Based on the market cap, Bybit is 2nd with 39m monthly visits. Coinbase follows closely to secure a strong position. Smaller exchanges like Kraken and KuCoin also continue to hold significant portions of the market, demonstrating competitiveness in the sector. 

Binance Losing Ground 

The future of Binance and its domestic arm Binance.US hinges on their ability to effectively respond to the increasing regulatory demands and competitive pressures within the crypto market. With the revocation of its license in Oregon and similar challenges in other states, the Binance.US need to strategize on how it will regain compliance and consumer confidence.

Meanwhile, the rise in the share of other exchanges shows that the industry is competitive with players like Bybit and OKX gaining ground. Binance and Binance.US will have to regain their market shares to get back in the game. 

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