Binance Mulls Shuttering Relationship With US-Based Businesses
Binance Holding Ltd is reassessing its position in the U.S. and could cut ties with its partner firms in the jurisdiction amid mounting regulatory pressure from the SEC and other financial watchdogs, Bloomberg reported on Friday.
Crypto’s largest exchange faces probes from the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), the Department of Justice (DOJ), and the Securities and Exchange Commission (SEC).
The company could also wind down its relations with U.S-located businesses like banks and venture capitalist firms. Previously, the crypto juggernaut halted U.S. Dollar bank transfers after issues with its local banking partner arose. Signature Bank announced plans to dial back its crypto exposure following a probe into the bank’s dealings with the exchange.
Friday’s report did not suggest that Binance.US, the company’s American affiliate, has any plans to exit the U.S. market yet.
Following the news, the word also spread that Binance was considering delisting U.S.-based crypto projects like Circle’s USDC. However, CEO Changpeng ‘CZ’ Zhao debunked such rumors on Twitter.
4. False. https://t.co/qjqLrx3TGF
The crypto exchange did implement a similar action by shipping an auto-conversion feature that swaps USDC for Binance USD (BUSD), the stablecoin token issued by crypto trust company Paxos. Notably, Circle CEO Jeremy Allaire voiced support for the decision, calling the move “a good thing” and opining that USDC utility would increase following the move.
Paxos-Issued Binance USD Falls Under Regulatory Crackdown
The news comes a few days after Paxos, the issuer of BUSD was, ordered to stop minting new BUSD tokens. Paxos announced plans to cease minting support for the Binance-branded stablecoin following a directive from the New York Department of Financial Services (NYDFS).
Paxos also fell under scrutiny from the U.S. Securities and Exchange Commission and was served a Wells notice by the regulator. Indeed, the SEC accused Paxos of breaching investor protection laws by allegedly selling unregistered securities. The crypto trust company refuted the SEC’s allegations and expressed intentions to “vigorously litigate” the matter.
It was later revealed that USDC Issuer Circle tipped off the NYDFS about discrepancies in blockchain data at the crypto exchange. Circle told the New York regulator that Binance did not maintain sufficient crypto asset reserves to back issued tokens.
CZ’s company had previously admitted to a similar issue involving some of its wallets and claimed that the issue was resolved afterwards.
Updated at 7:04 PM UTC to include: Circle (USDC) tipping off NYDFS and Binance admitting issues with asset storage.
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