Binance.US, the American branch of the world’s largest cryptocurrency exchange, has revealed its plans to halt US dollar deposits and withdrawals temporarily. This decision comes as the exchange’s banking partners prepare to pause the channels through which US dollars can be withdrawn from the platform. The move follows regulatory authorities’ recent legal action against Binance and its CEO, Changpeng Zhao.
To adapt to the changing landscape, Binance.US stated that it is taking proactive measures to transition into a crypto-only exchange for the time being. While trading, staking, and deposits and withdrawals in cryptocurrencies will continue to operate without interruption, customers will temporarily be unable to deposit or withdraw US dollars from the exchange. Binance.US explained that its payment and banking partners had indicated their intention to pause USD fiat channels as early as June 13, 2023.
Binance.US has issued a statement urging its customers to withdraw their USD by June 13th. However, they have cautioned that the withdrawal process might take longer than usual due to high transaction volumes. The company has emphasized that customer funds are secure, safe, and readily available.
The Rise of Binance and CZ’s Influence in the Crypto Industry
Binance.US is a subsidiary of Binance.com, a cryptocurrency exchange that experienced significant growth since its establishment in 2017. The company has generated billions of dollars in revenue primarily through transaction fees from cryptocurrency trading. Binance and similar exchanges have played a vital role in enabling individuals to enter the cryptocurrency market by allowing them to purchase assets like Bitcoin using traditional fiat currencies such as the US dollar.
Binance’s rapid success has propelled its CEO, Zhao (also known as CZ), to become one of the wealthiest individuals globally. He has been a prominent advocate for the cryptocurrency industry. Forbes recently estimated his net worth at $10.5 billion (£8.4 billion), though a significant portion of his wealth is tied to his ownership stake in Binance.
In recent years, regulators have been closely examining certain digital assets to determine if they should be classified as securities, similar to stocks or bonds. Securities trading is heavily regulated in major financial markets.
The US Securities and Exchange Commission (SEC), a financial regulatory body, has accused Binance and its CEO, Zhao, of engaging in deceptive practices. The SEC has filed 13 charges against Binance, including violations of the US Securities Act and operating as an unregistered exchange. A day after the lawsuit against Binance, the SEC also filed a lawsuit against Coinbase, the largest cryptocurrency platform in the United States.
SEC Crackdown on Cryptocurrency Industry and Allegations Against Binance.US and Zhao
The SEC has been intensifying its crackdown on the cryptocurrency industry, especially following the collapse of FTX, a Bahamas-based platform, last year. The founder of FTX, Sam Bankman-Fried, is now facing charges related to securities fraud, money laundering, and other offenses.
According to a court filing by the SEC, US regulators have expressed support for freezing Binance’s assets. This further indicates the escalated actions being taken against the company by regulatory authorities.Binance.US has accused the SEC of employing “extremely aggressive and intimidating tactics” to pursue an “ideological campaign against the American digital asset industry.” The company has stated that these tactics have created challenges for the unnamed banks it collaborates with.
According to the SEC, Binance and Zhao allegedly failed to truly separate the US company from its parent exchange, leading to the claim that the parent company of Binance.US was set up by Binance and Zhao to “knowingly circumvent US law while secretly controlling the Binance.US platform’s operations for their benefit.”
The SEC further alleged that Binance and Zhao “subverted their own controls to secretly allow high-value US customers to continue trading on the Binance.com platform.”
Despite the allegations, Zhao has consistently denied any wrongdoing and has retweeted criticisms of the SEC on Twitter. Binance has stated that it “respectfully disagrees” with the SEC’s claims and emphasized that “any allegations that user assets on the Binance.US platform have ever been at risk are simply wrong.”
