Two days after SEC crackdown, Binance prepares to halt dollar trade
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Days after one of the world's largest crypto exchanges, Binance Holdings Ltd., was sued by the US Securities and Exchange Commission (SEC), the company announced that it is suspending USD deposits and notifying customers that they will no longer be able to use US dollars to buy crypto on their platform as early as June 13, 2023.
The SEC and the Commodity Futures Trading Commission (CFTC) have investigated the crypto exchange platform for alleged violations of financial laws in the US, reported Interesting Engineering on Tuesday. SEC and CFTC have alleged that crypto platforms, like Binance and Coinbase, mishandled customer funds and misled investors.
Encouraging their customers to take appropriate action with their assets, the US arm of Binance said in a tweet: “The SEC has taken to using extremely aggressive and intimidating tactics in its pursuit of an ideological campaign against the American digital asset industry. Binance.US and our business partners have not been spared in the use of these tactics, which has created challenges for the banks with whom we work.”
Trading, staking, deposits, and withdrawals in crypto will remain fully operational, informed the exchange in a notice to its customers.
The war against crypto
The crackdown on the crypto industry is expanding in the US, with exchange firms finding it more difficult to rope in banking partners to facilitate the selling and buying of digital assets. The crypto industry has been dealt a lousy hand, especially after the collapse of several American banks in a row. Signature Bank, Silicon Valley Bank, and Silvergate Capital shuttered due to increased regulatory scrutiny of the crypto industry after the 2022 collapse of several big crypto exchanges.
For companies like Binance and Coinbase, losing banking access means that the highly volatile crypto would be isolated from the traditional banking industry.
In a recent interview with Bloomberg, SEC Chair Gary Gensler warned that the crypto industry could undermine trust in capital markets and cautioned against investment advisers holding crypto assets in their funds. “Your funds in custody of Binance, you don’t even know where it is. You know that Mr Zhao (is) ultimately controlling it but (he) may have actually moved it to a sister organization. There’s another one that we allege, Merit Peak, (where) the billions of dollars of funds were moving to.”
The SEC has also filed a case against Binance founder Changpeng Zhao, accusing him of foul play in transferring client deposits into accounts reserved for corporate purposes. The company Merit Peak that Gensler refers to in the interview is an offshore trading company that has received $11 billion from a Seychelles-based firm used to deposit Binance customer funds. Merit Peak, which has no headquarters or a business website, is owned by Zhao, as per a report by CCN.
You can read Binance.US’ full statement here:
The SEC has taken to using extremely aggressive and intimidating tactics in its pursuit of an ideological campaign against the American digital asset industry. https://t.co/AZwoBOgsqS and our business partners have not been spared in the use of these tactics, which has created… pic.twitter.com/rlIe6swIoY
— Binance.US 🇺🇸 (@BinanceUS) June 9, 2023
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