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On Thursday, the Binance.US cryptocurrency exchange made an announcement stating that it will be temporarily halting all US dollar deposits, in light of the lawsuit filed against them by the SEC.
This development comes shortly after Binance and its CEO, Changpeng Zhao, were sued by US regulators. The exchange’s banking partners also plan to halt fiat dollar withdrawal channels, possibly starting on June 13.
Binance.US Suspends USD Deposits
According to the exchange’s official statement, Binance.US will offer a crypto-only exchange service and suspend all US dollar-related services. All trading, staking, deposits, and cryptocurrency withdrawals will continue unaffected. The U.S. Securities and Exchange Commission (SEC) recently filed a lawsuit against Binance and its founder, Changpeng Zhao, and targeted Coinbase.
4️⃣ #BinanceUS suspends all USD deposits following SEC lawsuit. Withdrawals are ACTIVE.No Matter What Will Happen, #binance Will Be Survivor of This Disgusting War. Full Support to @cz_binance 🦾
#SEC #USDT #CRYPTO https://t.co/Gc9VjquCsE
— Alpha Whale Crypto (@AlphaWhale_) June 9, 2023
According to Matthew Dibb, COO of Singapore crypto platform Stack Funds, the decision to halt withdrawals may lead to concerns and anxiety among users, considering Binance.US is a smaller entity than its international counterpart.
Dibb also notes that it was expected that Binance would encounter challenges due to the ongoing comments and issues raised by the Securities and Exchange Commission (SEC) and other regulatory bodies.
Surprisingly, Binance’s BNB token showed little reaction to the news, seeing a minor decline of 0.46% to USD 261.46. Tony Sycamore, a market analyst at I.G. Markets, observed that the market’s response has been relatively mute. This suggests that it either ignored the news or fully understood its essence.
In a tweet on Thursday, Binance.US expressed its view that the SEC’s perspective on cryptocurrency is “extremely forceful and harsh.” The exchange pledges its commitment to actively defend itself, its customers, and the industry against what it considers to be meritless attacks from the SEC. Following the lawsuits, the crypto industry has criticized SEC Chair Gary Gensler, although he has denied allegations that the agency is attempting to suppress the crypto industry.
Binance.US Assets Deemed Frozen
The SEC has taken immediate action, wanting to freeze the assets of Binance’s U.S. subsidiary and bring back the customers’ assets. They also pursued emergency relief actions against other entities connected to Binance.
The commission filed an emergency order with the federal judge in Washington, D.C., to freeze the assets of Binance’s US subsidiary, Binance.US. The SEC alleges that Binance and its founder, Changpeng Zhao, have demonstrated “disregard” for U.S. law.
BREAKING: The SEC just asked the court to freeze all assets in Binance US
Assets are about to flow out of Binance US quickly! pic.twitter.com/Fqg8b4MSsG
— Genevieve Roch-Decter, CFA (@GRDecter) June 6, 2023
If the courts grant the order, Binance must repatriate any money held outside the US for US customers. The freeze would apply to Binance’s two US holding companies and accounts held at various financial institutions. However, the non-US-regulated international exchange would remain unaffected.
The SEC’s move comes after it filed a lawsuit against Binance and Zhao, accusing them of fraudulent activities, improper commingling of funds, and operating as an unregistered securities exchange.
The SEC argued for the emergency restraining order to stop asset excess due to Zhao and the company’s alleged history of breaking US laws. In addition, the order mandates that Zhao and his two holding companies must provide a justification for not complying with the preliminary injunction, while also prohibiting all three entities from destroying any potential evidence
The SEC’s filing includes an exception for BAM Trading Services Inc., permitting them to continue transferring customer assets for withdrawal processing as long as they do not belong to any Binance-related entity.
This year has witnessed significant regulatory efforts and enforcement actions in the US regarding cryptocurrencies. The SEC also filed a lawsuit against U.S.-based crypto exchange Coinbase. Similar actions were taken against the crypto exchange Bittrex earlier in the year.
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