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Binance.US Faces Financial Isolation as SEC Lawsuit Triggers Banking System Cut-Off

Key Points: 

  • Binance.US is facing the consequences of a lawsuit by the US SEC against the crypto exchange, as its banking partners have decided to sever ties with the platform.
  •  The partners have announced their intention to halt US dollar fiat channels as soon as June 13. 
  • The allegations made by the SEC against Binance include breaching securities regulations, as well as providing investors and regulators with misleading information.

In a recent development, Binance.US, the American wing of the world’s largest cryptocurrency exchange, is facing the prospect of being cut off from its banking partners. This comes in the aftermath of a lawsuit filed by the US Securities and Exchange Commission (SEC) against Binance and its founder, Changpeng ‘CZ’ Zhao. The lawsuit, which was filed on Monday, alleges that Binance mishandled customer funds, misled investors, and failed to register with the SEC. 

As a result of these allegations, Binance.US’s banking partners have decided to “pause” its access to US dollar deposits, with the suspension expected to take effect as early as next week. This is a significant setback for Binance.US, and it remains to be seen how the company will react to this latest development.

Binance Being Cut Off

Binance.US, a cryptocurrency exchange, has announced that its customers will no longer be able to use U.S. dollars to purchase crypto on its platform as of June 13. This decision has severely hindered the exchange’s ability to do business in the United States, as both payment and banking partners have expressed their intent to pause USD fiat channels. 

Binance.US announced this development via Twitter, citing the Securities and Exchange Commission’s “unjustified civil claims against our business” as the reason for the move. The exchange has already disabled customers’ ability to buy and deposit U.S. dollars in anticipation of the upcoming change. 

This is a significant setback for Binance.US, which has been rapidly expanding its operations in the US market. The exchange has been working hard to establish relationships with banks and other financial institutions to offer its customers easy access to fiat currency. However, the SEC’s lawsuit has halted those efforts, at least for the time being.

The Billion Dollar Accusations 

The influence and control that Zhao holds over the U.S. and international branches of Binance, a network of offshore holding companies that allegedly moved billions of dollars of assets between themselves, has caught the attention of the SEC. In response, the SEC has filed an emergency motion for a temporary restraining order to freeze U.S. dollars from the exchange. 

This move suggests that Binance’s banking partners have deemed the exchange to be too risky of a client to continue working with. While customers will not lose their money, the shutdown date looms and those who have not withdrawn their funds may need to convert them to a stablecoin, like tether, and withdraw it from elsewhere. 

End Notes 

The recent lawsuit filed by the SEC against Binance and CZ is sending shockwaves throughout the cryptocurrency industry. It’s expected to have far-reaching consequences that could affect the entire industry. The lawsuit may trigger a wave of regulatory scrutiny that could force other cryptocurrency exchanges to comply with US regulations. This could also lead to a further decline in the value of cryptocurrencies, which have already suffered due to regulatory crackdowns.

Binance.US and other cryptocurrency exchanges will face challenges as they try to operate in the US market without access to traditional banking services. To overcome this hurdle, they may need to collaborate with smaller banks and credit unions or develop their own payment processing systems. The cryptocurrency industry will need to be innovative and adaptable in order to survive and thrive in the face of increasing regulatory pressure. It remains to be seen how the industry will evolve, but one thing is certain – change is coming.