Binance’s dominance fell to 44% last year amid escalating legal and regulatory issues

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according to data Data from Paris-based cryptocurrency information platform Kaiko shows that Binance exchange’s market share dropped significantly last year to 44.5%.

The decline comes after a three-year upward trend in which Binance’s market share grew from 22% in 2020 to a peak of 60% in 2022. However, ensuing regulatory hurdles in some regions have caused Binance’s market share to decline over the past year.

Binance’s Market Share | Source: Kaiko

Binance’s legal issues

Due to regulatory non-compliance issues, Binance withdrew from Canada, the United Kingdom, and many European countries in 2023, including Austria, Cyprus, the Netherlands, and others.

However, the main catalyst for the decline in market share stems from the legal issues Binance has encountered in the United States. Here, federal agencies including the Commodity Futures Trading Commission (CFTC), the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC) took legal action against them.

The U.S. Department of Justice said the world’s largest exchange was charged with putting growth and profits ahead of complying with U.S. law.

The legal actions prompted CEO and co-founder Changpeng Zhao to resign and forced a record $4.3 billion settlement with authorities. Zhao is currently in the United States, awaiting sentencing for his role on the trading platform.

Meanwhile, the U.S. Securities and Exchange Commission (SEC) remains a huge challenge for Binance, with both the exchange and its U.S. subsidiary facing charges. Regulators accused the company of listing unregistered securities, commingling assets and manipulating the market.

Additionally, the SEC classifies Binance-related cryptocurrencies such as BNB and the stablecoin BUSD as securities.

Despite declining market share and facing legal action, Binance attracted 40 million new users in 2023, growing its global user base to 170 million. The company also announced it spent more than $200 million last year to strengthen regulatory compliance efforts.