- The announcement of lawsuits against Binance and Coinbase prompts banks to distance themselves from potential fallout, affecting Binance.US in particular.
- Binance.US announces the suspension of fiat withdrawals from June 13 due to the withdrawal of banking partners.
In the wake of the Securities and Exchange Commission’s (SEC) announcement of lawsuits against cryptocurrency giants Coinbase and Binance, a discernible divide is materializing within the banking sector. Disturbed by the preceding Silvergate and Signature incidents, banks are proactively moving away from the anticipated fallout, primarily impacting Binance.US.
Binance, purported by the SEC as the primary beneficiary of Binance.US, finds itself in the middle of an imminent civil lawsuit. However, organizations exposed to this development have already initiated measures to safeguard their balance sheets.
Binance voiced disappointment in the SEC’s decision to opt for legal action over productive dialogue, echoing similar sentiments expressed by executives at Coinbase and Kraken. The crypto behemoth affirmed their considerable efforts in seeking a negotiated settlement to resolve the SEC investigations. Still, the regulatory agency decided on unilateral action, propelling litigation.
“We are disheartened by that choice. While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously.”
However, the unsettling reality of litigation has caused anxious banking representatives to ‘press pause’ on their relationships with Binance, the colossal crypto trading platform.
As a result, Binance.US announced on Twitter the suspension of fiat withdrawals from June 13 until further notice. The move comes as a direct response to banking partners withdrawing from arrangements with the platform.
Crypto investors may not feel the immediate impact, as they can still cash out via stablecoins transferred to different exchanges. Nevertheless, risk-averse investors might opt to exit the markets promptly.
For now, this decision pertains exclusively to Binance.US. No announcements have been made concerning fiat withdrawals for Binance itself, but the possibility remains open. Binance spokespersons have not specified which of their banking partners have severed ties.
Considering the vast extent of Binance’s operations, the platform has always maintained relationships with numerous banks simultaneously. This list includes Cross River Bank, Axos Bank, and the three recently insolvent banks that were part of heated discussions earlier this spring.