Binance Halts US Dollar Deposits Amid SEC Suit

Facts

• After the US Securities and Exchange Commission (SEC) sued crypto giants Binance and Coinbase earlier this week, the US’ independent branch of Binance. Binance US, announced it will no longer allow users to trade US dollars on its exchange Thursday, changing to a “crypto-only” platform.¹
• The SEC also asked a D.C. court to freeze Binance.US’s assets, which are held by BAM Trading — citing efforts to protect US customers from Binance’s “evasion of regulatory oversight” in a volatile crypto market.²
• Binance halted all dollar deposits on Friday, and customers have until Tuesday, June 13 to withdraw their dollars before the exchange transitions to all-crypto transactions. That same day, Binance.US and the SEC will meet in court as part of the ongoing dispute.³
• The SEC has filed 13 charges against Binance, its CEO Changpeng Zhao, BAM Trading, and BAM Management US Holdings, accusing these entities of violating the Securities Act and the Exchange Act. The SEC also alleges that Zhao is operating a “web of deception.”⁴
• The SEC filed an emergency motion that would have frozen US dollars from being traded on Binance since it judged that the world’s largest exchange was operating freely with its purportedly independent US partner without proper oversight. However, Binance called the claims “unjustified.”⁵
• Binance.US was started in 2017 and has generated billions in revenues as its CEO Zhao has become one of the world’s richest men. In the wake of FTX’s collapse, regulators have cracked down on the industry and potential corruption.⁶

Sources: ¹Reuters, ²Forbes, ³Coindesk, ⁴FOX News, ⁵CNBC, and ⁶Guardian.

Narratives

• Pro-establishment narrative, as provided by MSNBC. If there’s anything we’ve learned from the past few months, it’s that regulators cannot stand idly by while crypto companies orchestrate billions of dollars worth of transactions and hold billions of American dollars without proper oversight. Like any emerging industry, there's uncertainty regarding asset classification and how pre-existing laws apply to novel businesses. However, the SEC has been clear that Binance.US must be separate from Changpeng Zhao’s Binance, and there is ample evidence that the two entities are exchanging customer funds freely and circumventing American law.
• Establishment-critical narrative, as provided by CoinDesk. The SEC is overstepping its bounds and making legitimate cryptocurrency exchanges pay for the sins of fraudulent FTX. Federal regulators are showing a clear lack of understanding about digital assets and cryptocurrency and are targeting an entire industry based on the actions of a few bad companies. At the end of the day, the SEC has always had it out for crypto and its potential to revolutionize the global economy, and it will go after the industry by any means necessary.

Predictions