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Banks have signaled that they will stop working with the company’s American branch, it said, after the Securities and Exchange Commission sued it this week.
Reporting from San Francisco
The American branch of Binance, the giant cryptocurrency exchange, said late on Thursday that it would no longer allow customers to trade on its platform using U.S. dollars, after its banking partners cut the firm off in response to a crackdown by federal regulators.
The move is a major blow to Binance.US, the American arm of the world’s largest crypto exchange. One of the main functions of an exchange is allowing users to convert their traditional money into digital currencies like Bitcoin or Ether. Binance will no longer be able to offer that service in the United States.
In a message to customers, Binance.US said it was “taking necessary actions as we transition to a crypto-only exchange.” In recent days, the company said, its banking partners had signaled that they would no longer facilitate the movement of dollars on and off Binance.US’s platform.
The Securities and Exchange Commission sued Binance on Monday, accusing the firm and its chief executive, Changpeng Zhao, of mishandling customer funds and lying to regulators. In a separate filing, the S.E.C. asked a federal judge in Washington to freeze assets related to U.S.-based customers of Binance, citing “the defendants’ years of violative conduct.”
Representatives for Binance did not immediately respond to a request for comment.
The crypto industry has been under intense pressure from federal regulators since November, when the collapse of the FTX exchange set off an industrywide crisis. The day after it sued Binance, the S.E.C. filed a separate case against Coinbase, the largest American crypto exchange. Some crypto companies have vowed to fight the crackdown, while others are making plans to leave the United States entirely.
In its message to customers on Thursday, Binance.US said it was facing “extremely aggressive and intimidating tactics” from the S.E.C. The company said it was suspending deposits of U.S. dollars and urged users to withdraw any dollars they have been storing on the exchange by Tuesday.
At the same time, the company tried to assure its customers that their savings were backed up by money it holds in reserve.
“To be clear, we maintain 1:1 reserves for all customer assets,” the message said. “Customer funds are always safe, secure and available.”
David Yaffe-Bellany covers cryptocurrencies and financial technology. He graduated from Yale University and previously reported in Texas, Ohio, Connecticut and Washington, D.C. More about David Yaffe-Bellany
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As an expert in cryptocurrency and blockchain technology, my comprehensive knowledge in this field allows me to provide insights into the recent developments surrounding Binance and its American branch. I have a deep understanding of the technical, regulatory, and financial aspects of the cryptocurrency space.
First and foremost, the article discusses the decision by Binance.US, the American arm of the world's largest cryptocurrency exchange, to no longer allow customers to trade on its platform using U.S. dollars. This action comes in response to a crackdown by federal regulators, notably the Securities and Exchange Commission (SEC), which sued Binance and its CEO, Changpeng Zhao, accusing them of mishandling customer funds and providing false information to regulators.
The move by Binance.US is significant because it eliminates the ability for users to convert traditional fiat currency, such as U.S. dollars, into digital currencies like Bitcoin or Ether on the platform. This restriction is a consequence of the company's banking partners cutting ties with Binance.US due to the regulatory pressure.
The Securities and Exchange Commission's involvement highlights the increased scrutiny and regulatory challenges faced by the cryptocurrency industry. The SEC not only sued Binance but also filed a separate case against Coinbase, the largest American crypto exchange, indicating a broader regulatory crackdown on the industry.
The article mentions that Binance.US is undergoing a transition to become a "crypto-only exchange" in response to the challenges posed by the SEC and the severed ties with banking partners. The company assures its customers that their funds are secure and that it maintains 1:1 reserves for all customer assets. This move is reflective of the broader trend within the crypto industry, where some companies are vowing to resist regulatory pressure, while others are considering leaving the United States entirely.
In conclusion, my expertise in cryptocurrency allows me to dissect the nuances of the Binance situation, shedding light on the technical, regulatory, and financial implications for both the company and the broader cryptocurrency industry in the United States.
