Binance.US, the American arm of the world's largest cryptocurrency exchange, has announced that it will suspend US dollar deposits and withdrawals as its banking partners prepare to pause the channels for fiat transactions. This development comes just days after Binance and its CEO, Changpeng Zhao, were sued by US regulators. The move signifies a proactive step by Binance.US in transitioning to a crypto-only exchange for the time being.
While trading, staking, deposits, and withdrawals in cryptocurrencies will continue to operate normally, customers will no longer be able to deposit or withdraw US dollars from the exchange. Binance.US stated that its payment and banking partners have indicated their intention to pause USD fiat channels as early as June 13, 2023.
Binance.US has urged its customers to withdraw their USD holdings by June 13, although it cautioned that due to elevated volumes, withdrawals may take longer than usual to process. The company assured customers that their funds are safe, secure, and readily available.
Binance.US is a subsidiary of Binance.com, a cryptocurrency exchange that has experienced rapid growth since its establishment in 2017. The company generates billions of dollars in revenue, primarily from transaction fees related to cryptocurrency trading. Binance and similar exchanges have played a crucial role in introducing many people to the world of cryptocurrencies, enabling them to purchase assets such as Bitcoin using traditional fiat currencies like the US dollar.
The success of Binance has propelled its CEO, Changpeng Zhao, also known as CZ, to become one of the world's wealthiest individuals on paper, with an estimated net worth of $10.5 billion (£8.4 billion) according to Forbes. However, much of his wealth is derived from his ownership stake in Binance.
Regulators have been scrutinizing digital assets for several years, assessing whether they should be classified as securities such as stocks or bonds. Securities trading is heavily regulated in major financial markets.
On Monday, the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Changpeng Zhao, accusing them of operating a "web of deception" and levying 13 charges, including violations of the US Securities Act and operating as an unregistered exchange. The SEC's crackdown on the crypto industry has intensified in recent months following the collapse of FTX, a Bahamas-based crypto platform, and the subsequent charges against its founder, Sam Bankman-Fried, for securities fraud and money laundering.
In response to the SEC's actions, Binance.US denounced the "extremely aggressive and intimidating tactics" employed by the regulator, characterizing it as an ideological campaign against the American digital asset industry. The company also highlighted the challenges posed by the SEC's actions for the banks it collaborates with.
Binance.US maintains that it operates as a separate entity from its parent company. However, the SEC alleges that Binance and Changpeng Zhao failed to truly separate the US-based platform from the main exchange. According to the SEC, the parent company of Binance.US was established by Binance and Zhao with the intention of circumventing US law while maintaining secret control over the operations of the Binance.US platform for their own benefit. The SEC claims that Binance and Zhao bypassed their own controls to allow high-value US customers to continue trading on the Binance.com platform.
Changpeng Zhao has vehemently denied any wrongdoing, repeatedly expressing his disagreement with the allegations. On Twitter, he has shared criticisms of the SEC made by others. Binance has also emphasized that user assets on the Binance.US platform have never been at risk.
The suspension of US dollar deposits and withdrawals by Binance.US represents a significant development in the ongoing legal battle between the cryptocurrency exchange and US regulators. As the crypto industry faces increased scrutiny, the outcome of this case could have broader implications for the regulation of digital assets in the United States.
