Last Updated on November 21, 2023 by Bitfinsider

The decline coincides with Binance being subject to stringent regulatory oversight and a $4 billion fine levied by the U.S. Department of Justice (DOJ) to resolve all claims pertaining to violations of federal security laws.

By providing zero-fee transactions, Binance enabled the majority of its 2022 trade volumes, according to blockchain data analytics company Kaiko. Even though the unconstrained model was discontinued early this year, trading activity continued to decline.

Even without any charges being filed by the DOJ as of Nov. 20, volumes have been declining amid heightened legal attention from the United States.

Despite the substantial $4 billion charge, Binance is expected to sign a deferred prosecution deal with the US government, which may allow them to pay the fines over a two-year period.

Nevertheless, Kaiko points out that Binance may face serious difficulties in having to pay $4 billion in fines while changing its business strategy to adhere to stricter laws made worse by a decline in trading volume.

In light of the legal ambiguity, traders and protocols may have been shifting away from Binance and the BNB Chain, as indicated by the sharp volume decline. Given this and the information provided by Kaiko, other exchanges that place a strong emphasis on regulatory compliance in important countries, such as the US and others, might be able to overtake Binance in terms of market share.

In addition to the punishment, Changpeng Zhao, the CEO of Binance, may have to settle with the US authorities on direct criminal accusations.

Zhao and Binance were sued by the SEC in June 2023. The sale of unregistered securities was one of the thirteen accusations in the case.

The authority then asked for the digital assets of Binance.US to be frozen. Users were unable to deposit USD as a result, which led to a spike in sales from people looking to withdraw money in fiat.