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CEX trading volumes fell to 4-year lows even before Binance, Coinbase suits

June 8, 2023 Coin Telegraph

Binance

Monthly trading volumes on centralized exchanges continued to fall in May as regulators tighten their grip on the industry.

Trading volumes on centralized exchanges have fallen to their lowest levels in more than four years amid mounting regulatory pressure from United States regulators and lawmakers.

According to a June 7 report from crypto analytics firm CCData, combined spot and derivatives trading volume in May fell 15.7% from the previous month, marking the second consecutive month of dwindling crypto trading activity.

As the data is only current to the end of May, it does not take into account any potential impact from the recent SEC lawsuits against Coinbase or Binance.

*Total monthly spot trading volume on centralized exchanges since May 2022. Source: CCData*

CCData shows that of all the major firms to suffer a decline in trading volumes, Binance was hit the hardest.

In May, Binance gave up even more of its total market share, falling to just 43% overall, down from its peak of 57% in February. This marked the third consecutive month that Binance’s total market share declined.

The report said this bulk of this decline can be attributed to Binance removing zero-fee trading for USDT pairs but noted the exchange was no doubt feeling the squeeze of increased scrutiny from regulators in the U.S.

*Top centralized exchange market share change March thru May. Source: CCData.*

The largest beneficiaries of Binance’s market share slide were crypto exchanges Bullish, Bybit and BitMEX, which each gained a little more than 1% in market share between March and May.

On June 5, the SEC sued Binance and its CEO, Changpeng Zhao, for failing to register as a securities exchange and for offering unregistered securities. Within 24 hours, the net outflows from Binance topped $778 million, though the company has assured the public that their assets remain safe.

In the 48 hours following, the median trading volume across the top three decentralized exchanges (DEX) jumped 444%.

Despite overall trading volumes waning — mostly due to spot trading — the market share of derivatives trading across centralized exchanges increased, notching a new record in the process.

According to the report, the derivatives market on centralized exchanges now represents 79.5% of the entire crypto market, a 1.2% increase from 78.3% in April. Still, total derivatives volumes decreased by 14.4% in May.

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CEX trading volumes decline in April after months of growth: Kaiko

May 4, 2023 Coin Telegraph

Binance

After three months of consecutive growth, centralized exchange trading volumes fell to their lowest this year in April.

Centralized crypto exchanges have seen a dip in trading volumes in April for the first time in three months as digital assets cool off from a hot first quarter.

According to blockchain data provider Kaiko, trading volumes on centralized exchanges have fallen back following three consecutive months of gains.

April’s volumes were almost half of those in March at roughly $500 billion, according to the data. The month has been the lowest so far this year in terms of volumes with March being the highest.

The data provider noted that volumes had reached pre-FTX collapse levels until April's decline. It also noted that markets remain above 2020 levels in terms of trade volumes.

“Overall, however, the crypto market remains significantly larger than it was before the 2020 bull run,” said Kaiko.

Trade volumes on #CEXs declined in April after rising for three consecutive months and surpassing pre-FTX levels in March.

Overall, however, the crypto market remains significantly larger than it was before the 2020 bull run.#crypto #TradeVolume #liquidity #CEX pic.twitter.com/cmftFD3Qya
— Kaiko (@KaikoData) May 3, 2023

According to data from The Block, legitimate centralized exchange spot volume decreased by 43.8% to $400.5 billion in April.

“The majority of the decrease is due to Binance adding back fees on BTC pairs,” it noted. Binance remains the market leader with a dominance of 71.6%, according to the data.

Furthermore, Binance has a 24-hour trading volume of around $10 billion which is significantly larger than its nearest rival Coinbase with $1.1 billion, according to CoinGecko.

In late April, Cointelegraph reported that Binance’s Bitcoin balance increased by over 50,000 BTC, roughly $1.5 billion, in a month. The move preceded the sell-off as BTC hit heavy resistance just over the $30,000 level.

U.S.-based crypto exchange Coinbase has seen its app downloads also in decline in recent months as trading volumes dwindle in the sideways market, according to a report from Yahoo News.

Tom Grant, the VP of research at Apptopia, a research firm that tracks app usage metrics, said the shrinking app usage paints a bearish picture for the company.

The CEX volume decline comes as digital asset markets began to retreat from their 2023 highs in mid-April. On April 16 total market capitalization hit an eleven-month high of $1.34 trillion. However, markets have declined 7.5% to $1.24 trillion since then.

Since the beginning of the year, crypto markets have gained 50% but they have remained largely range bound for the past six weeks or so.

Analysts have hinted that the correction is likely to continue as markets have been somewhat overheated for the first quarter of the year.

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How to buy or sell Bitcoin without using a centralized crypto exchange?

April 12, 2023 Coin Telegraph

Centralized Exchange

With the fall of P2P exchanges like Paxful and LocalBitcoins, the question of how to buy or sell crypto without using CEXs is a pertinent one.

The failure of FTX triggered a notable growth of self-custody in 2022, with numerous cryptocurrency investors transitioning from centralized exchanges (CEX) to hardware or software wallets.

The rising popularity of self-custody could even potentially erase the need for centralized exchanges one day, according to Binance CEO Changpeng Zhao. But how would people buy or sell cryptocurrencies without centralized exchanges?

The crypto industry already offers ways to exchange cryptocurrencies like Bitcoin (BTC) for fiat money without using a CEX like Binance. However, such a process is associated with certain pros and cons and may require additional research.

This article will discuss the most straightforward exchange methods to shed some light on buying or selling crypto without using a centralized crypto trading platform.

Bitcoin ATMs

Bitcoin-enabled automated teller machines (ATMs) are probably one of the easiest ways to exchange fiat money for crypto and vice versa. Like conventional ATMs, Bitcoin ATMs allow users to deposit and withdraw money using cash or a debit card. But instead of a bank account, a Bitcoin ATM requires users to have a BTC wallet address to deposit or withdraw money.

Like a traditional ATM, a Bitcoin ATM has a monitor, a QR scanner, a bill acceptor and a dispenser. To connect their Bitcoin wallet to a crypto ATM, users are usually prompted to scan a QR code corresponding to their BTC wallet address.

While providing a simple way to exchange money against cryptocurrencies, Bitcoin ATMs suffer from limited global adoption.

According to data from CoinATMRadar, there are roughly 34,000 Bitcoin ATMs in 80 countries worldwide, with almost 85% of all crypto ATMs in the United States. About 4% of Bitcoin ATMs are located across Europe, with most of those located in Spain, Poland, Romania, Switzerland and Austria.

The infrastructure of global cryptocurrency ATMs has also seen a significant decline recently. According to data from CoinATMRadar, 412 crypto ATMs were removed from the grid worldwide in the first two months of 2023, compared with 1,000 monthly crypto ATM installations between December 2020 and January 2022.

Given the limited reach of crypto ATMs, one shouldn’t rely entirely on their capability to exchange fiat for crypto. According to some industry executives, crypto ATMs have also been increasingly scrutinized by regulators recently, which could bring even more issues to the exchange method.

“For a long time, ATMs provided an excellent service to anyone looking to buy and sell Bitcoin privately,” Trezor’s Bitcoin analyst Josef Tetek told Cointelegraph. “Current global trends suggest that this era is coming to its end, as ATM providers are becoming regulated just like any other financial institution,” he noted, suggesting that Bitcoin ATMs are likely to become significantly less private in the near future.

Another weak spot of Bitcoin ATMs is high transaction costs, with fees often ranging from 5–20%.

Peer-to-peer Bitcoin exchange platforms

Peer-to-peer (P2P) Bitcoin exchange marketplaces are among the most common crypto exchange options alongside Bitcoin ATMs. Such platforms allow users to trade digital currency directly with each other without the need for a centralized third party to facilitate the transactions.

Unlike CEXs, P2P exchanges don’t rely on automated engines to complete transactions, allowing users to manually choose their preferred offer, trade directly with a counterparty, and transact funds using a self-custodial wallet. Such platforms are less vulnerable than CEXs due to their independence from intermediaries controlling funds during a trade.

Many industry executives believe that P2P crypto marketplaces are likely to be the future of crypto due to their unique features. “P2P exchanges are far more resilient to regulatory crackdowns than centralized exchanges,” Jan3 CEO Samson Mow told Cointelegraph, adding that it would be good to have more P2P options.

“P2P services are the future of Bitcoin adoption, but only if they can successfully avoid intruding on users’ privacy,” Trezor’s Tetek said. He specified that some regulatory restrictions, like Know Your Customer (KYC), could essentially make P2P crypto services useless, stating:

“Having a P2P service with KYC is merely a variation of using a CEX but with worse liquidity.”

While providing a more resilient option on the regulatory side, P2P services are often associated with security issues, according to Quantum Economics founder and CEO Mati Greenspan. P2P exchanges like Binance P2P or now-terminated Paxful and LocalBitcoins are “certainly a step in the right direction,” he said, adding:

“This sort of online marketplace maintains the decentralized ethos of crypto, but it is also susceptible to attacks from both regulators and hackers.”

Crypto on-ramp/off-ramp integrations on software or hardware wallets

Another common way to buy or sell crypto without a CEX is using an on-ramp or an off-ramp solution provided within a self-custodial wallet through a third-party payment provider.

Software wallets like Exodus and hardware ones — like Ledger and Trezor — offer several methods to deposit or withdraw Bitcoin using default software through various payment integrations. Such wallets often allow users to buy crypto or cash out their coins using bank transfers, debit or credit card payments, Apple Pay and other options, depending on the country of the user’s bank location.

Providing a simple alternative to Bitcoin ATM or P2P services, wallet exchange integrations are currently accompanied by issues like limited coverage due to the low adoption of crypto payment partnerships worldwide. Due to this issue, residents of many countries may find it impossible to exchange their crypto against fiat because their banks aren’t supported on the payment provider’s network.

However, one may also find that wallet exchange integrations are a bit costly in terms of fees. For example, some third-party application programming interface (API) providers on Exodus Wallet charge up to 12% in automated clearing house transfer fees.

Software and hardware wallets are usually integrated with more than just a single off-ramp or on-ramp provider, offering a significant variety of choices. Some providers include PayPal, MoonPay, Transak, Sardine, Banxa, Coinbase Pay, Onramp.money and Mercuryo — among others.

Offline P2P exchange

One doesn’t necessarily need to use online exchange services to buy or sell Bitcoin. There is an opportunity to do that in person or by interacting with investors who want to cash out or acquire some cryptocurrency on social media apps.

“Various alternatives do exist for offline transactions where the buyer meets the seller in person. Depending where you live, this might happen at a regular currency exchange shop or through a known black market dealer,” Greenspan told Cointelegraph. He referred to groups on messengers like Telegram or WhatsApp, where buyers and sellers are constantly making connections. “I’ve even heard of people using sites like Craigslist,” the exec added.

Offline P2P exchange of Bitcoin is the “best choice for privacy-minded individuals,” Trezor’s BTC analyst Tetek believes. He stressed that exchanging Bitcoin in person is essentially returning to the roots of BTC exchange. “Bitcoin meetups are usually the best place to find fellow Bitcoiners looking for an exchange,” he said.

As everything has pros and cons, offline P2P exchange isn’t unique, and some massive concerns are associated with such a Bitcoin exchange method.

The biggest risks of offline P2P exchange are related to safety and limited scalability, Quantum Economics’ Greenspan said, adding:

“There are loads of disadvantages from safety concerns to the uncomfortable feeling of dealing with a complete stranger, but mostly it’s just not a very scalable solution.”

Such a crypto exchange method also requires users to be much more knowledgeable and savvy than just purchasing online at a well-known crypto exchange.

Can you buy Bitcoin on a DEX?

While considering options for buying or selling Bitcoin without interacting with a CEX, one may consider using a decentralized exchange (DEX) as an alternative. But should a DEX count as a standalone option to a CEX in this regard?

Despite offering the opportunity to buy or sell Bitcoin, DEXs usually require users to have some exposure to crypto before the transaction. That means that Bitcoin can only be purchased or withdrawn with the help of other cryptocurrencies on a DEX.

Additionally, some issues currently prevent DEXs from serving as a solid alternative to CEXs in terms of buying or selling crypto, according to Trezor’s Tetek. “Some of the major challenges include unfriendly user experience, high spreads resulting from low liquidity, and concerns about receiving ‘dirty’ Bitcoin or fiat,” he said. The analyst added that these issues must be addressed for further adoption of DEXs.

It also depends on what one refers to as a DEX, Jan3’s Mow added. “If you’re referring to an Ethereum-based DEX, it’s not an alternative at all because, at the base layer, Ethereum isn’t decentralized,” the executive argued, adding that a real DEX won’t have any centralized part that can be shut down.

Is there a future without centralized crypto exchanges?

Despite the industry offering many decentralized options to exchange Bitcoin against fiat, CEXs remain a significant player.

Apart from offering a straightforward entry into the crypto market and Web3, CEXs are also an important industry component in terms of price discovery, according to Bitcoin proponent Mow. He stated:

“Centralized cryptocurrency exchanges will always continue to exist, and they are an important venue for price discovery and liquidity. Only regions that endorse a heavy-handed approach will force exchanges out, but that’s really to the detriment of their people.”

It’s yet to be known whether CEXs will continue to be a key part of the crypto industry in the coming years. Some experts are confident that the industry will get rid of centralized exchanges one day.

“For now, centralized exchanges remain a necessary scourge on the industry, and I do look forward to the day we can do without them entirely,” Quantum Economics CEO Greenspan said.

“Centralized exchanges pose a risk not only to the privacy and security of Bitcoin users but also undermine the very reason Bitcoin came into existence — creating a parallel financial system and supporting the financial autonomy of its holders,” Trezor’s Tetek stated. He added that CEXs undeniably served as an accelerator for Bitcoin adoption in the past, but they are slowly becoming its “biggest enemy.” The BTC analyst added:

“I can definitely imagine a world without any CEXs. When Bitcoin becomes a global monetary standard, there will be no need to exchange Bitcoin for fiat.”

Debate over 2FA using SMS after SIM-swapping victim sues Coinbase

March 8, 2023 Coin Telegraph

2FA

While members of the crypto community are doubtful the lawsuit against Coinbase will be successful, it has sparked a conversation about the issues with SMS 2FA.

The crypto community is debating whether SMS two-factor authentication (2FA) should ever be used for account security following news that a Coinbase customer is suing the cryptocurrency exchange for $96,000.

On Mar. 6 Jared Ferguson filed a lawsuit against Coinbase in the United States District Court for the Northern District of California, claiming he lost “90% of his life savings” after funds were withdrawn from his account by identity thieves and Coinbase had refused to reimburse him.

Ferguson is said to have fallen prey to a type of identity theft known as “SIM swapping,” which allows fraudsters to gain control of a phone number by tricking the telecom provider into linking the number to their own SIM card.

This allows them to bypass any SMS 2FA on an account, and in this situation allegedly allowed them to confirm the withdrawal of $96,000 from Ferguson's Coinbase account.

Ferguson claimed he lost service after his phone was hacked on May 9, and noticed the funds had been taken from his Coinbase account after getting a new sim card and restoring his service as per instructions from his service provider T-Mobile.

T-Mobile was previously sued by a SIM-swapping victim in February 2021 following the theft of approximately $450,000 worth of Bitcoin (BTC).

Coinbase denied any responsibility for the hack of Ferguson’s account, telling him in an email that he is “responsible for the security of your e-mail, your passwords, your 2FA codes, and your devices.”

Members of the crypto community were generally doubtful that Ferguson’s lawsuit would be successful, noting that Coinbase encourages the use of authenticator apps for 2FA rather than SMS and describes the latter as the “least secure” form of authentication.

I'm guessing his password was compromised because it was used on other sites, one of which got breached. Also, Coinbase encourages Authenticator app for 2FA by labeling it "secure" and SMS as "moderately secure".
— Dave Ferguson (@_sc0rn) March 7, 2023

Some Reddit users discussing the lawsuit in a post titled “Never Use SMS 2FA” went as far as suggesting SMS 2FA should be banned, but noted that it was the only authentication option available for many services, as one user said:

“Unfortunately a lot of services I use don’t offer Authenticator 2FA yet. But I definitely think the SMS approach has proven to be unsafe and should be banned.”

Blockchain security firm CertiK warned of the dangers of using SMS 2FA in September, with its security expert Jesse Leclere telling Cointelegraph that “SMS 2FA is better than nothing, but it is the most vulnerable form of 2FA currently in use.”

Leclere said dedicated authenticator apps like Google Authenticator or Duo offer nearly all the convenience of using SMS 2FA while removing the risk of SIM swapping.

Reddit users shared similar advice but added authenticator apps on phones also make that device a single point of failure and recommended the use of separate hardware authentication devices.

Binance ‘not planning any layoffs,’ 500 roles to be filled in H1

March 3, 2023 Coin Telegraph

BTC

A Binance spokesperson told Cointelegraph that they hired 600 people since January and have no imminent plans for layoffs.

Cryptocurrency exchange Binance is “not planning any layoffs” and is instead trying to fill another 500 roles by the end of June, according to a Binance spokesperson.

The comments came despite a huge spike in crypto layoffs in January — the majority of which were from crypto exchanges. In a statement, the Binance representative said:

“As of today, we are actively hiring for more than 500 roles with the goal of filling them by the end of H1 [...] We are not planning any layoffs.”

The spokesperson was responding to a request for clarification from Cointelegraph on March 1 regarding a tip it had received of possible redundancies at the crypto exchange. The latest comments appear to completely refute this speculation.

At the time of writing, Binance had 463 listings on its job openings page, with roles in business development, communications, customer support and engineering, to name a few.

*Some of the business development job openings at Binance. Source:* *Binance*

In January, Binance CEO Changpeng Zhao said that the firm was planning for a hiring spree in 2023, increasing its headcount by 15% to 30%, according to a Jan. 11 report from CNBC.

The spokesperson said that the company has hired more than 600 people since the start of 2023.

According to CoinGecko, 84.8% of the crypto layoffs in January were due to crypto exchanges reducing headcount, including Coinbase, Huobi, Blockchain.com, Crypto.com and Luno.

Coinbase announced it would be reducing its headcount by around 950 on Jan. 10, while Crypto.com announced on Jan. 13 that it would be reducing its workforce by around 500.

Binance has been regarded by some, such as Arcane, as one of the “winners” of 2022, with the fall of crypto exchange FTX and the implementation of zero-fee Bitcoin (BTC) trading leading to it capturing an overwhelming portion of the market.

On the other side of the coin, the exchange has also seen intense scrutiny. Most recently, this has revolved around the alleged shuffling of $1.8 billion in funds which some have compared to the actions of bankrupt crypto exchange FTX.

Binance used $1.8 billion in customer funds for its own purposes, similar to what FTX did

Here we go again
— Genevieve Roch-Decter, CFA (@GRDecter) February 28, 2023

Binance CEO Changpeng Zhao took to Twitter to respond to the allegations, labeling it “FUD” and suggesting it was standard practice for an exchange.

This year has had a tough start for those working in the crypto industry, with at least 14 firms and nearly 3,000 jobs being lost in January before a milder 570 layoffs in February.

But the tide could be turning, with the crypto market cap increasing by over 34% so far in 2023, according to CoinMarketCap, and other firms, such as USDC issuer Circle, also planning to go on a hiring spree.