Binance halts trading in US dollars

Binance halts trading in US dollars

The logo of Binance US is seen at a stand during the Bitcoin Conference 2022 in Miami Beach, Florida, on April 6, 2022. (Photo: Reuters)
The logo of Binance US is seen at a stand during the Bitcoin Conference 2022 in Miami Beach, Florida, on April 6, 2022. (Photo: Reuters)

NEW YORK: The American branch of Binance, the giant cryptocurrency exchange, said late Thursday that it would no longer allow customers to trade on its platform using United States dollars, after its banking partners cut the firm off in response to a crackdown by federal regulators.

The move is a major blow to Binance.US, the American arm of the world’s largest crypto exchange. One of the main functions of an exchange is allowing users to convert their traditional money into digital currencies like bitcoin or ether. Binance will no longer be able to offer that service in the US.

In a message to customers, Binance.US said it was “taking necessary actions as we transition to a crypto-only exchange.” In recent days, the company said, its banking partners have signalled that they will no longer facilitate the movement of dollars on and off Binance.US’ platform.

The announcement comes after the Securities and Exchange Commission (SEC) sued Binance on Monday, accusing the firm and its CEO, Changpeng Zhao, of mishandling customer funds and lying to regulators. In a separate filing, the SEC asked a federal judge in Washington to freeze assets related to US-based customers of Binance, citing “the defendants’ years of violative conduct.”

Representatives for Binance did not immediately respond to a request for comment.

A smartphone with displayed Binance logo and representation of cryptocurrencies are placed on a keyboard in this illustration taken on Thursday. (Photo: Reuters)

The crypto industry has been under intense pressure from federal regulators since November, when the collapse of the FTX exchange set off an industrywide crisis. The day after it sued Binance, the SEC filed a separate case against Coinbase, the largest American crypto exchange. Some crypto companies have vowed to fight the crackdown, while others are making plans to leave the United States entirely.

In its message to customers Thursday, Binance.US said it was facing “extremely aggressive and intimidating tactics” from the SEC. The company said it was suspending deposits of US dollars and urged users to withdraw any dollars they have been storing on the exchange by June 13.

At the same time, the company tried to assure its customers that their savings were backed up by money it holds in reserve.

"To be clear, we maintain 1:1 reserves for all customer assets,” the message said. “Customer funds are always safe, secure, and available."

This article originally appeared in The New York Times.

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