Days after being sued by the Securities and Exchange Commission, the U.S. arm of cryptocurrency giant Binance, announced Some heartbreaking news: Customers will no longer be able to use USD to trade on the platform.
Banks affiliated with the exchange’s U.S. arm, Binance.US, have been horrified by the SEC’s actions and have cut off critical payment rails that allow the movement of dollars on and off the platform, the company said.
This week, the SEC filed a string of lawsuits against Binance, the world’s largest cryptocurrency company, and US exchange Coinbase. The SEC said Binance lied to regulators and mishandled customer funds. Coinbase was accused of operating as an unlicensed stock exchange.
The effect of the suit was immediate. Trading application “Robinhood” from June 27 Said Trading in three popular cryptocurrencies (Solana, Cardano and Polygon) that the SEC classified as unregistered securities in court filings will no longer be supported.
The changes to Binance.US will be fully effective as early as Tuesday. Here’s what this announcement means for customers:
Suspension of important types of trading
One of the main roles of cryptocurrency exchanges is to act as a portal. Customers can log on and convert dollars to cryptocurrencies such as Bitcoin and Ether.
According to the announcement, Binance.US will be discontinuing its service, at least for the time being. In a message to customers, the company said it was “taking necessary steps to transition to a cryptocurrency-only exchange.”
This means that trading enthusiasts can continue to use cryptocurrencies to buy other digital currencies. For example, you can spend Bitcoin on a little bit of Ether. However, buying and selling cryptocurrencies in US dollars is prohibited.
Deadline for withdrawal of funds
A cryptocurrency exchange is more than just a marketplace. Customers also place their holdings on the platform, storing both traditional and digital currencies.
In a statement, Binance.US said it was suspending US dollar deposits and urged users to withdraw their US dollars stored on exchanges by June 13.
Cryptocurrency trading remains active
According to a statement from Binance.US, any remaining dollars on the platform can be exchanged for stablecoins, a type of cryptocurrency designed to maintain a constant price of $1.
And the company has tried to ensure that the cryptocurrencies held by its customers are safe. “For clarification, we maintain his one-to-one reserve for all client assets,” the message read. “Customer funds are always safe and securely available.”
Could other exchanges impose similar restrictions?
That will likely depend on the reaction of U.S. banks that have partnerships with other cryptocurrency companies. It is worth noting that Coinbase, which was also sued this week, has not made a similar announcement.
The lawsuits against Coinbase and Binance are very different. The SEC has accused Binance of mishandling customer funds and pouring billions of dollars into a trading company owned by CEO Changpeng Zhao.
The accusations are reminiscent of the collapse of the FTX exchange, which cost customers billions of dollars. Prosecutors allege that FTX Chief Executive Sam Bankman-Fried misused his client’s money, transferring it to a trading firm he ran for political donations and real estate.
The SEC’s Coinbase lawsuit has a much narrower scope. The agency argues that Coinbase offers cryptocurrencies that meet the legal definition of securities like stocks and bonds traded on Wall Street and should be regulated as such.
