Binance US to suspend dollar transactions after payment partners pause activity

The American arm of Binance is suspending dollar transactions after its payment partners indicated they would pause US currency activity with it, in the latest blow to the crypto exchange facing a lawsuit from American regulators.

Binance US said in a statement on Friday morning that dollar dealing via banks and other payment partners would be paused as early as June 13, and from next week it would start to delist trading pairs involving the US currency.

The company added it would transition to a crypto-only exchange.

The decision comes four days after the Securities and Exchange Commission filed a total of 13 civil charges against Binance, associated entities including Binance US and chief executive officer Changpeng Zhao. 

Zhao said on Thursday that Binance US had roughly $2bn in user funds “to the best of my knowledge”.

The SEC’s allegations against the crypto conglomerate include operating unregistered exchanges and misrepresenting trading controls and oversight on the Binance US platform. The regulator added that Binance and Zhao had control of client assets, and Zhao used a secretive offshore entity to send more than $16mn to a Binance-related entity to provide funds described as “critical” to the operations of Binance US.

Binance.com, Binance’s offshore trading platform, said it was disappointed and disheartened by the SEC’s action, and added that while it took the regulator’s allegations seriously, they “should not be the subject of an SEC enforcement action”. Binance US called the lawsuit “baseless”.

“Irrespective of the baseless claims, and in light of the commission’s increasingly aggressive tactics, our payment and banking partners have signalled their intent to pause USD fiat channels as early as June 13 2023, meaning our ability to accept USD fiat deposits and process USD fiat withdrawals will be impacted,” Binance US said in its statement.

It added that as part of its crypto-only activity it would continue to support trading via stablecoins, a kind of cryptocurrency designed to track the price of traditional currencies.

The move is the latest indication that the Binance conglomerate is struggling to maintain active payment links connecting cryptocurrencies to the traditional financial system. Filings by the SEC alleged that Merit Peak and Sigma Chain — two offshore entities that the regulator claims served Binance and Zhao — both held accounts with Silvergate, and Merit Peak also had one at Signature, two defunct crypto-friendly banks.

In February, the wider Binance group announced it would suspend US dollar payments on the exchange. It did not provide a reason for the decision.

One month later, Paysafe, an online payments provider, said it would wind down services to UK customers of Binance. Earlier this month, Binance Australia ceased all Australian dollar trading pairs, saying it was “working hard to find an alternative provider to continue offering AUD deposits and withdrawals to our users”.