Crypto exchange Binance US stated it would no longer enable users to trade on its platform using US dollars. This comes after its banking partners indicated they would halt US currency activity with Binance as it faces legal action from federal regulators.
On Friday morning, Binance’s purportedly independent US subsidiary tweeted that dollar transactions through banks and other payment partners will be suspended as early as June 13, 2023. Exchange did not provide a list of its banking partners.
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
Moreover, the company will also begin delisting US currency trading pairs next week. The exchange said that staking, deposits, withdrawals, and trading of other cryptocurrencies on the platform would not be affected.
However, the company would switch to a crypto-only exchange.
The crypto exchange stated:
“To be clear, we maintain 1:1 reserves for all customer assets. Customer funds are always safe, secure, and available.”
The company appears to be encouraging customers to withdraw or exchange US dollars before the freeze begins.
“We encourage customers to take appropriate action with their USD.”
This action is a major shock for Binance.US, the American branch of the world’s largest crypto firm. Each crypto exchange allows customers to convert their traditional assets into cryptocurrencies such as BTC or ETH. Unfortunately, Binance US will not be able to offer this service in the region.
Why Did The SEC Sue Binance?
The failure of the FTX exchange, which sparked an industry-wide crisis, has prompted federal regulators to step up scrutiny of the crypto market since last year. SEC has targeted a broad segment of the crypto space.
SEC introduced a pair of lawsuits against crypto giants such as Binance and Coinbase, which account for half of global digital asset trading.
The financial regulator filed 13 civil charges against Binance, its CEO Changpeng Zhao, and related companies, including Binance US, on June 5.
The SEC’s charges against the crypto group include mishandling user funds, operating an unregistered exchange, artificially inflating the site’s trading volume, and taking steps to avoid US regulation. The agency stated that the firm provided users with unregistered securities in the form of BNB tokens and BUSD stablecoins.
However, the SEC asked a federal judge in Washington to lock Binance’s funds linked to US-based clients, citing years of wrongdoing by the company.
Binance.com said the SEC’s action was disappointing. The company said it welcomed the regulator’s allegations, but the exchange should not be the subject of the regulators’ enforcement action. Binance US has claimed that the lawsuit is “baseless.”