The BTC-U.S. dollar trading pair on Binance.US jumped as high as $28,800 earlier on Wednesday morning, some $1,700 higher than the average price across other exchanges at that time, Clara Medalie, research director of digital asset data firm Kaiko, said. Market makers are wary ahead of this double blow to Binance’s U.S. entity, and are removing liquidity from the exchange’s order books in anticipation of a possible freeze.
Cryptocurrencies such as Bitcoin (BTC), Ether (ETH) and Tether’s USDT stablecoin have been trading at large premiums on Binance.US, a sign that investors are exiting the platform in light of the U.S. Securities and Exchange Commission’s (SEC) actions against the company. This follows the SEC’s Monday lawsuit against Binance, CEO Changpeng CZ Zhao and Binance.US, alleging multiple federal securities law violations.
BTC and ETH market depth on Binance.US has dropped significantly since Monday’s lawsuit, Kaiko data shows. In response, Binance.US announced Wednesday that it will remove a plethora of USDT, BTC and BUSD trading pairs from its Advanced Trading platform and will pause its over-the-counter (OTC) trading service.
The unusually high price premium is a sign of deteriorating liquidity on the platform as traders are retreating in anticipation of a potential asset freeze, according to Medalie. This is not the first time that Binance.US users experienced price discrepancies. In May, the BTC-USD pair traded $650 higher on that exchange than on Coinbase, as crypto market watchers contemplated a possible SEC crackdown and U.S.-based market makers began scaling down operations there.