Binance, the largest cryptocurrency exchange worldwide, is anticipated to relinquish its leading position following a guilty plea to US charges and a record $4.3 billion penalty. This development comes as the market value of cryptocurrencies rises by 12% or $180 billion over the past week. However, Binance Coin (BNB), the native token of the platform, has not experienced significant gains and has only increased by 1.7%, currently trading at $231 in London.
BNB’s Reflection of Sentiment
BNB is often considered an indication of sentiment towards the exchange due to the benefits it offers, such as lower trading fees on Binance. However, despite the growth in the overall cryptocurrency market, BNB remains the only major token that is still facing a year-to-date loss, according to Bloomberg data. This discrepancy is mainly due to the legal troubles that Binance has been grappling with throughout the year.
Diminishing Dominance
Although Binance still maintains its position as the dominant platform for digital asset and crypto derivative trading, its share of spot trading volumes has decreased from 55% at the start of 2023 to 32% in November, as reported by CCData. Additionally, its derivatives market share declined from over 60% to 48%. Matthew Sigel, Head of Digital Assets Research at VanEck, predicts that Binance will lose its top spot as the No. 1 centralized exchange following the plea deal with US authorities. Sigel pointed out that competitors like OKX, Bybit, Coinbase, and Bitget could potentially take over the leading position.
“We expect Binance will lose its throne as the No. 1 centralized exchange by volumes following the plea deal with US authorities,” said Matthew Sigel, the head of digital assets research at VanEck.
Moreover, Binance’s founder, Changpeng Zhao, pleaded guilty and stepped down as CEO after the settlement with US authorities. Richard Teng, a former civil servant turned crypto executive, has taken on the role of the new CEO and faces the challenge of reshaping the company to avoid further regulatory issues and regain market share.
“Binance’s recent legal troubles have contributed to BNB’s underperformance in the market,” explained Clara Medalie, director of research at Kaiko.
Teng has emphasized the strong revenues and profits of Binance; however, the company is under pressure to establish a formal headquarters, appoint a board of directors, and provide greater financial transparency. Despite recent setbacks, BNB has outperformed many other tokens over longer time periods, with a 700% increase in the past three years compared to a 121% increase in the index of the top 100 tokens.
Richard Teng has hinted at Binance’s ability to pay the $4.3 billion fine imposed by the US Justice Department, stating that the exchange is in a good financial position. This response came after Connor Lango, director of business development at Coinbase, suggested that Binance would likely be able to “pay the full $4.3B DoJ fine with 0 crypto asset sales.”
