Binance’s U.S. branch has ceased permitting dollar withdrawals, as reflected in Monday’s updated terms of service. The updated terms of service reads “In the event you wish to withdraw U.S. dollar funds from your Account, you may convert such U.S. dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn.”
Binance.US had previously paused U.S. dollar deposits following escalating tensions between the exchange and the U.S. regulatory system.
Related reading: Binance US halts U.S. Dollar Deposits After SEC Lawsuit
No Dollar Withdrawals: Historical Context
The updated policy follows a prolonged legal tug-of-war between Binance.US and the United States Securities and Exchange Commission (SEC), a topic that has become a focal point of the cryptocurrency community. One of the defining episodes in this confrontation was Binance’s tweet on June 17, outlining its legal hurdles with the SEC.
A notable aspect of this ongoing legal saga was the court’s refusal to grant the SEC a Temporary Restraining Order (TRO) against Binance.US. Had the TRO been authorized, Binance contended it would have “effectively shuttered” its business, causing a direct ripple effect on its American user base.
Related reading: US Court Denies SEC’s Request to Inspect Binance.US
Central to Binance’s defense is the assertion that the SEC’s accusations are unfounded. The exchange has persistently emphasized the lack of solid evidence presented by the SEC regarding any mishandling of customer funds. This standpoint gained further credence during court hearings, when under judicial scrutiny, SEC attorneys admitted to the absence of evidence implicating Binance in any wrongdoing. This admission reinforced Binance’s position and cast doubt on the SEC’s foundational claims.
Based on the SEC complaint and supporting declaration, the SEC alleges that Binance operated an unregistered digital asset securities exchange and failed to register as a national securities exchange, while also making materially misleading statements and omissions regarding the true nature of its business.
Specifically, the SEC claims Binance facilitated trading of digital asset securities without SEC registration and operated an exchange in violation of registration requirements under the Securities Exchange Act of 1934. The SEC seeks injunctive relief, disgorgement of ill-gotten gains plus interest, and civil penalties.
Impact on the Crypto Industry
The implications of the Binance and SEC feud extend far beyond the two entities. The broader cryptocurrency industry is closely watching the developments, as the final verdict could potentially mold the regulatory framework for other exchanges operating within the U.S.
Binance’s interpretation of the SEC’s actions paints a picture of a regulatory body attempting to inhibit the growth and mainstream adoption of cryptocurrencies. If this viewpoint gains traction, it could potentially set a concerning precedent for other exchanges and crypto-related businesses, signaling a more restrictive regulatory environment in the U.S. for digital assets.
Not Your Keys Not Your Coins
The current legal troubles highlight the importance of self-custody for bitcoin. It is unwise to keep bitcoin on any exchange.
Bitcoin was created to eliminate the need to trust a third party with funds. There is no need to risk losing money by keeping it with a party that is prone to legal challenges.