Under pressure caused by a series of regulatory actions by the SEC, Binance.US has halted all US dollar (USD) withdrawals. The suspension of USD withdrawal service will take effect from this week.
In an email sent to users, Binance required customers to convert their dollars to stablecoins or other digital assets before withdrawing. The updated terms also note that US dollar deposits are no longer protected by the Federal Deposit Insurance Corporation (FDIC).
For a long time, Binance has faced many challenges with US regulators. Federal regulators have sued Binance, the world’s largest crypto exchange, accusing the company of running an illegal exchange in the United States and commingling billions of dollars’ worth of customer funds.
Binance US, at the end of June, informed customers that if they want to withdraw USD, let’s do it soon because this service may be suspended soon.
“While USD withdrawals remain fully operational, we encourage you to use, withdraw, or convert your USD to a stablecoin to continue crypto-to-crypto trading, as we expect our banking partners to discontinue USD withdrawals in the near future.”
Binance and Binance US are facing serious legal troubles. On June 5, the US Securities and Exchange Commission filed a lawsuit against Binance with a total of 13 charges. The SEC said in its lawsuit that billions of dollars in Binance customer funds were commingled, or mixed with corporate funds, in breach of US laws, in a bank account of an entity controlled by Zhao, then transferred to a trading firm, Merit Peak, also controlled by Zhao.
Another allegation is that Binance.US conducted money laundering transactions through a secret Market Maker (MM) called Sigma Chain, owned by CZ. Thereby, the SEC has filed an application with the court, requesting to freeze Binance US’s assets.
The crypto market fluctuated strongly since then. Binance US was also in trouble after delisting more than 100 trading pairs from the Advanced Trading and discontinuing OTC services. The prices of BTC, ETH, and BNB on Binance US also began to deviate from the global average.
The SEC initially proposed freezing all of Binance US’s assets; however, after many negotiations, Binance.US and the SEC have reached an agreement that only Binance.US employees can access client funds.