Banks to cut off Binance from US banking system as crypto giant suspends US dollar deposits amid SEC crackdown
- The US arm of Binance says it is pausing US dollar deposits, while continuing to provide crypto deposit services
- US financial regulators say they support a freeze on the assets of Binance, the world’s largest cryptocurrency exchange
The US arm of the world’s largest crypto exchange said in a tweet at 10:33pm EDT (0233 GMT) on Thursday that the move comes as it is taking “proactive steps” in its transition to a crypto-only exchange for the time being.
Trading, staking, deposits and withdrawals in crypto would remain fully operational, the exchange said in a notice to its customers.
On Monday, the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its founder Zhao, and subsequently sued Coinbase, the largest US cryptocurrency platform, a day later.
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The developments mark a dramatic escalation of a crackdown on the industry by US regulators, following the implosion of FTX last year.
Earlier on Thursday, US financial regulators said they supported a freeze on Binance’s assets, according to a US SEC filing to a federal court and made public.
“Binance.US is a considerably smaller business than their international group. Halting of withdrawals is obviously going to create or spur quite a bit of worry and panic,” said Matthew Dibb, chief operating officer of Singapore crypto platform Stack Funds.
“But day after day for the last week, Binance has been hit with various types of comments and issues from the SEC and regulators, so this was really to be expected.”
Binance.US said in its tweet that the SEC’s take on cryptocurrency is “extremely aggressive and intimidating”, adding that it has created challenges between the exchange and its banking partners.
“This is going to be a long battle, it’s not going to get sorted the next two months or three months, it’s most likely going to take a few years,” said Dibb.
