Binance.US to halt dollar deposits after SEC crackdown

The U.S. affiliate of Binance said it was halting dollar deposits and gave customers until Tuesday to withdraw their dollar funds, after the U.S. securities regulator asked a court to freeze its assets.

The U.S. affiliate of Binance said it was halting dollar deposits and gave customers until Tuesday to withdraw their dollar funds, after the U.S. securities regulator asked a court to freeze its assets. Binance.US, the purportedly independent partner of Binance, said in a tweet on Thursday that its banking partners were preparing to stop dollar withdrawal channels as early as June 13.

The SEC sued Binance, its CEO and founder Changpeng Zhao, and Binance.US's operator on Monday, in a dramatic escalation of a crackdown on the industry by U.S. regulators. The SEC sued major U.S. exchange Coinbase a day later. Binance.US said in the tweeted customer notice that it would no longer accept dollar deposits as part of plans to change to a "crypto-only exchange". It called the SEC's civil charges "unjustified" and said it would "vigorously defend" itself.

The SEC alleged in 13 charges on Monday that Binance had in a "web of deception" artificially inflated trading volumes and diverted customer funds, as well as failing to restrict U.S. customers from its platform. The SEC on Tuesday asked a federal court to freeze Binance's U.S. assets. Binance.US called the motion "unwarranted", saying it had addressed SEC concerns over the safety of customer assets.

The SEC said it had not received "sufficient reassurance" that Binance.US's customer assets were controlled by its operator, BAM Trading, "rather than under the control or influence of Binance or Zhao, a person who has openly expressed his desire to avoid compliance with U.S. law." Zhao and Binance had "free reign" to handle Binance.US assets, the SEC said. "They have exercised this control over U.S. investor assets with no oversight or controls to ensure that those assets are properly secured," it added.

Binance did not immediately reply to a request for comment. It has said it would "defend our platform vigorously," saying the SEC was limited in reach as Binance was not a U.S. exchange. Binance.US's customer assets total more than $2.2 billion held in crypto and some $377 million in U.S. dollar bank accounts, the SEC said.

'EXISTENTIAL THREAT' BAM Trading holds customer's funds directly with California-based Axos Bank, according to a letter from lawyers for BAM Trading to the SEC dated May 26, which was made public by the SEC on Tuesday.

Axos did not immediately respond to a request for comment sent via email. Binance.US had struggled to find banking partners after the failure of Signature Bank, the Wall Street Journal reported in April.

In its tweet on Thursday, Binance.US said crypto-denominated trading, deposits, withdrawals and "staking" - where users deposit cryptocurrencies for use in blockchain transactions - would remain fully operational. "This is very serious for Binance.US because Americans cannot use Binance Global," said Clara Medalie, director of research at Kaiko.

"The inability for Binance.US to offer USD trading services in a region the exchange was specifically built to operate in is an existential threat." Crypto prices barely reacted to the news, with bitcoin last trading up 0.4% at $26,610. It was headed for a weekly loss of about 1.9%, after having dipped to an over two-month low of $25,350 earlier in the week as the SEC crackdown stoked nerves.

Binance's BNB token, the world's fourth-largest, slid 0.4% to $261.74.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)