The grand legal war between the SEC and the crypto world initially affected Binance.US, leaving cryptocurrency exchanges facing a genuine moment of survival.
At the beginning of this month, the U.S. Securities and Exchange Commission (SEC) filed lawsuits against crypto leaders Coinbase and Binance and issued a restraining order against Binance, requesting a freeze on the exchange's U.S. assets. On Thursday evening Eastern Time, Binance.US tweeted that due to its partner banks beginning to cut off access, its users may be unable to purchase cryptocurrencies with U.S. dollars on the platform as early as June 13.
The SEC has adopted an extremely aggressive, startling strategy in its ideological attack on the U.S. crypto asset industry. Binance.US and our business partners have not been spared, posing challenges to the banks we work with.
Therefore, to protect our customers and platform, we have suspended U.S. dollar deposits today and informed customers that our banking partners plan to suspend U.S. dollar withdrawal channels as early as June 13, 2023. Customers are advised to handle their U.S. dollar assets appropriately.
Our customers are always our top priority. We are taking steps to temporarily transition to a crypto-only exchange.
It needs to be clarified that we maintain a 1:1 reserve for all customer assets. Any delay in processing withdrawals could be a result of increased trading volumes and weekend bank closures. Moreover, trading, staking, depositing, and withdrawing of cryptocurrencies are still fully operational.
While we are open to fruitful compromises and look forward to the flourishing of the U.S. crypto asset market, Binance.US will continue to vigorously defend itself, its customers, and the industry from the relentless attacks of the SEC.
As previously mentioned by Wall Street Journal, the SEC has filed a civil lawsuit against Binance and its founder Changpeng Zhao, accusing them of violating U.S. securities laws.
The SEC stated that Binance is an international network composed of offshore holding companies, allegedly mixing or transferring customer assets at will, with billions of these assets delivered to the company's third party, Merit Peak, which also belongs to Zhao.
The most damaging accusation is that Binance is widely engaged in "wash trading," where crypto assets are sold in a cyclical pattern among a few accounts, exaggerating demand and artificially raising the price of crypto assets.
Binance.US customers will not face substantial losses of funds. Even if they have not withdrawn their assets before June 13, they can theoretically convert them into stable coins like Tether and then convert them to U.S. dollars through other channels.
However, banks' suspension of services for Binance.US is a major blow to Binance and Zhao, indicating that banks generally believe Binance's risk is too high and can no longer be involved in related business.
According to documents Binance provided to the SEC, its U.S. banking partners, including Axos, Cross River, and the now-defunct Silvergate, Signature Bank, and Silicon Valley Bank, have handled billions of dollars in transactions for Binance.US. Several bank partners have already stopped servicing Binance. At present, Binance has not disclosed which bank partners it still has.
After the announcement, due to the market's anticipation of the hit Binance.US took, the price of Bitcoin only dropped slightly and is still above $26,000 per coin.
