On Monday, Binance US, the US-based affiliate of the world’s largest cryptocurrency exchange, announced in its renewed terms of service that it was halting all customer withdrawals in USD. This comes after the exchange decided to stop users from depositing dollars into their wallets following the US Securities and Exchange Commission’s (SEC) move to freeze its assets.
In its updated terms, Binance US wrote that if customers wish to withdraw US dollar holdings from their accounts, they can only do so by converting the funds to stablecoins or other digital assets supported by the exchange.
Binance US Asks Customers To Convert USD Balances Into Stablecoins
Binance Holdings, Binance US, and its CEO Changpeng “CZ” Zhao were sued by the SEC in June for engaging in “extremely aggressive and intimidating tactics”. The Commission alleged that Binance US artificially inflated crypto trading volumes diverted customer funds, failed to restrict US customers from its platform, and misled investors about Binance US’s market surveillance controls.
Later that month, Binance and Binance US reached an agreement with the financial regulator to ensure that the assets of its US customers remain on the platform until the lawsuit is resolved. Under the court-approved terms, Binance US agreed to take measures to ensure that no Binance Holdings officials have access to the private keys of its hardware wallets or root access to the company’s Amazon Web Services tools.
At the same time, the SEC released a statement saying the emergency relief order will secure the assets of Binance’s US customers and ensure that they will be able to withdraw funds deposited in their accounts in fiat and crypto.
Other provisions of the proposed agreement ordered Binance US to create new wallets to which its employees will have no access, provide additional information to the SEC, and agree to an expedited discovery schedule.
After the SEC asked a federal court to freeze Binance’s US assets, the exchange halted all dollar deposits and gave customers a deadline of June 13 to withdraw their fiat balances as its banking partners were preparing to end dollar on-or-off ramp support. This date was later extended.
In an October 16 statement, Binance US stressed that, unlike USD, digital assets are not eligible for insurance protection by the Federal Deposit Insurance Corporation (FDIC). The terms of use also noted that dollar funds that remain in Binance US wallets are no longer protected by the FDIC’s deposit insurance.
Binance US Reveals Crypto Tokens Customers Can Convert To
In May, Binance US said that in the event the exchange terminates its relationship with a USD custodian and was unable to find another one, it would provide notice and time to customers to withdraw their US dollar deposits.
The company added that any dollar deposits that are not withdrawn before the deadline mentioned in the notice will be automatically converted to the dollar-pegged Tether (USDT) stablecoin and transferred to the respective customers’ wallets.
Binance US also said it would remove most “USD Advanced Trading pairs” from its platform. This means that from the 150 crypto assets, only Bitcoin (BTC), Ether (ETH), Cardano (ADA), BNB, Litecoin (LTC), Polygon (MATIC), Solana (SOL), VeChain (VET), USDC and USDT will be tradable against the dollar.
The exchange also added additional trading pairs for USDT: ANKR, DAI, DASH, HBAR, ICX, IOTA, RVN, WAVES, XNO, XTZ, and ZIL.
Regulatory Scrutiny Continues To Mount Over Binance
The latest development is yet another example of Binance and its affiliates struggling to maintain their fiat on-ramps and off-ramps in the US, UK, Europe, and Australia.
Earlier this year, Binance UK, the exchange’s UK-based affiliate, had to end support for deposits and withdrawals in British pound. sterling (GBP) after Skrill – a Faster Payments Service (FPS) transactions operator, and Binance’s British banking and payments partner, announced it would no longer support the platform due to regulatory complications.
Further info : Binance Halts Onboarding New British Users: What You Need To Know
In September, the crypto exchange’s EU banking partner Paysafe said it would no longer facilitate bank transfers in EUR for Binance users in the European Economic Area (EEA). Similarly, Binance had to quit the Netherlands and sell its business and assets in the country to domestic rival Coinmerce after failing to obtain a virtual asset service provider (VASP) license from Dutch regulators.
Binance Australia’s banking and payments partner also suspended their services for the exchange, causing users to rush to exit their crypto positions. The event was so massive that it led to BTC trading for 20% below its market price in Australia.
Further info : Binance Sells Russian Business To Newly-Launched Exchange
