Binance.US, the U.S. arm of the largest crypto exchange by trading volume, has started having trouble finding a bank to keep user funds on its behalf, according to a recent report from the Wall Street Journal.
The
popular crypto exchange's relationship with U.S. banks was mainly
disrupted following the U.S. Commodity Futures Trading Commission's
(CFTC) lawsuit against it.
- In late March, CFTC sued Binance and its CEO Changpeng Zhao (CZ) with allegations of regulatory violations in seven counts.
- The platform is also under scrutiny by the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and federal prosecutors in the U.S.
- At
least two U.S. banks, Cross River Bank and Customers Bancorp Inc.,
refused to work with Binance recently, citing regulatory concerns.
- Without
finding a banking partner, the unit cannot effectively serve its
customers since it always uses at least one middleman to store customer
funds.
- Binance.US
keeps user funds using several third-party crypto services and a
fintech dubbed Prime Trust LLC for now, though they are not long-term
solutions.
- Several customers have already reported some troubles withdrawing fiat currency from the exchange.
- The U.S. banking crisis similarly impacted the banks' attitude toward Binance.US.
- The
crisis started with the consecutive collapses of crypto-friendly
Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank within a
week in March.
- Binance.US was among Silvergate's and Signature's crypto clients before the shutdowns.
