Binance’s U.S. branch is reportedly having difficulties discovering a bank for its customers.
This issue began after the failure of Signature Bank and Silvergate Capital, two banks that catered to the crypto industry, as reported by The Wall Street Journal on Sunday (April 9).
This is the most recent in a chain of issues for Binance, the world’s largest cryptocurrency company, and its American counterpart, Binance.US.
According to the WSJ, Binance.US had been moving dollar deposits to either Signature or Silvergate. Then last month, Silvergate gave up and shut down, while Signature was seized by regulators in one the largest bank collapses in U.S. history. The closing of the banks has left crypto companies searching for new banking partners.
At the moment, Binance.US is using at least one third party to keep funds on its behalf, sources state. Because the middleman is keeping the funds at its bank, it can slow down the process of transferring money.
PYMNTS has contacted Binance.US for a comment but has not yet received a response.
Sources tell the WSJ that Binance.US has unsuccessfully attempted to get direct banking partnerships with banks that include Cross River Bank, the New Jersey-based lender that works with some crypto companies and FinTech firms, as well as Pennsylvania’s Customers Bancorp.
These connections never materialized, the sources said, because the banks were worried about regulatory risks.
News of former Binance.US CEO Catherine Coley hiring an attorney broke last month. A report by Reuters said Coley — who had launched the American arm of Binance before leaving the company two years later — did so as the government began an investigation into Binance.
The U.S. Commodity Futures Trading Commission (CFTC) then charged Binance CEO Changpeng Zhao, Binance Holdings Limited, Binance Holdings (IE) Limited and Binance (Services) Holdings Limited in federal court with violating the Commodity Exchange Act and CFTC regulations.
The CFTC also charged Samuel Lim, who served as Binance’s chief compliance officer from 2018 to 2022, with aiding and abetting these violations. Coley is not named in the CFTC suit, the Reuters report said.
In a statement to PYMNTS, a Binance spokesperson said the company has been working with the CFTC for two years, and that it finds the filing “unexpected and disappointing” after boosting its compliance team from 100 to 750 in the last two years.
