Banks Abandoning Binance.US as SEC Legal Battle to Begin

Following Monday’s announcement of lawsuits against Coinbase and Binance, firms both inside and outside of the crypto industry have started polarizing.

The civil lawsuit filed against Binance – which the SEC claims is the real beneficiary of Binance.US – has not yet begun. However, companies with exposure to the situation have started taking steps to secure their balance sheets.

Lack of Communication

Echoing similar statements by executives at Coinbase and Kraken, who accused the SEC of refusing to enter a constructive dialogue before starting litigation, Binance stated they are disappointed that the agency chose a court battle over an amicable discussion.

“We have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations. But despite our efforts, with its complaint today, the SEC abandoned that process and instead chose to act unilaterally and litigate.

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.”

Unfortunately for Binance, the fact that they are now involved in litigation has proven too much for skittish banking representatives, who have started to “put on hold” their relationships with the crypto trading giant.

Becoming Crypto-to-Crypto

In a statement published on Twitter by Binance.US, the platform announced that due to banking partners pulling out of deals with them, fiat withdrawals would be suspended from the 13th of June until a later date.

The SEC has taken to using extremely aggressive and intimidating tactics in its pursuit of an ideological campaign against the American digital asset industry. https://t.co/AZwoBOgsqS and our business partners have not been spared in the use of these tactics, which has created… pic.twitter.com/rlIe6swIoY

— Binance.US 🇺🇸 (@BinanceUS) June 9, 2023

In theory, a crypto investor wouldn’t have to worry too much about this, as cashing out can still be done via stablecoins transferred to a different exchange. However, cautious investors may still decide to pull out of the markets now.

For the moment, this decision is only relevant to Binance.US. No announcement has been made regarding fiat withdrawals for Binance itself. However, this is definitely not off the table. Spokespeople for Binance have not indicated which of the banks they deal with have pulled out of their working relationship.

Largely due to the scope of their business, Binance has always been in business with multiple such organizations at the same time, including Cross River Bank, Axos Bank, and the three recently defunct banks that have been the subject of much back-and-forth earlier this spring.