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Binance, the largest cryptocurrency exchange, recently announced that they will halt all deposits and withdraws from bank accounts that use US Dollars. The suspension will begin on Wednesday.
The exchange did not offer any explanation for the suspension of USD bank transfers on the exchange. However, Binance did state that only 0.01% of their customers will be impacted by the suspension. Now, this announcement caused a small amount of panic in the rightfully paranoid cryptocurrency community.
This article will cover everything you need to know about the suspension. We will even offer a possible explanation for Binance's decision.
No, Binance.US is not suspending USD bank transfers. This suspension will only impact Binance, which is the international version that American citizens are barred from using.
Remember, Binance.US is a separate business entity setup specifically to allow the exchange to enter the US market without having to increase regulations for the rest of their non-US customers. If Binance.US was banning USD bank transfers, then that would be concerning as a larger percentage of Binance.US users use USD bank transfers for withdrawals and deposits.
First of all, Binance did not give a reason for the suspension of USD bank transfers. It is odd for the company to not give a reason for something that will surely raise some level of suspicion in the community.
It certainly would have been nice to provide a reason somewhere in the announcement to assuage fears that this could be Binance conducting a rugpull or facing liquidity issues.
With that out of the way, here are some potential reasons that Binance is suspending USD bank transfers that are not related to liquidity issues.
Binance mentioned in their announcement that 0.01% of users actually use USD bank transfers on Binance.
That's obviously a low amount of people, so it makes sense that Binance would suspend the service. However, Binance did not state that was the reason – they only stated that not many people use it, so it is not a huge deal that they are suspending it.
If this was the reason, then Binance likely would have stated it outright in their announcement. Furthermore, it really does not make sense to suspend a service because too few people use it. Those customers may go to a different exchange that does provide that as an option.
For those reasons, we find it unlikely that this is the sole reason that Binance suspended USD bank transfers.
The far more likely reason, in our opinion, is that Binance is having regulatory issues with the United States. This was revealed in December 2022 when the Justice Department revealed that they were considering charging Binance executives with financial crimes related to money laundering and the transfer of illicit funds through Binance.
This would be a reason that the exchange might cancel USD bank transfers. Basically, Binance has had weak anti-money controls, which has allowed criminals to use the exchange to evade US sanctions and launder money according to the US Justice Department.
Suspending all withdrawals and deposits to USD bank accounts would greatly reduce the interest that the US government has in the exchange. The simple fact of the matter is that if the exchange can be used to withdraw US currency to a foreign bank account, then the US government will take an interest in it.
This reason would also explain why Binance has remained silent on the reason for the suspension. They do not want to spook the market as that could easily cause a crash.
There has been a lot of speculation on crypto Twitter that Binance will rugpull or otherwise collapse. Again, a lot of the cryptocurrency industry is very paranoid from the collapse of FTX, so they view any negative announcement as a potential collapse of an exchange.
With that said, it's unlikely that Binance will collapse in the near future. Of course, anything could happen, but we have seen no indications that Binance will collapse. They have a lot of funds in their bank account and cold wallets, so they are liquid.
One important thing to mention, however, is that you should still not keep a large amount of funds on any centralized exchange no matter how unlikely they are to collapse. First of all, a centralized exchange can collapse or simply decide to not give you your funds.
That's simply the risk of a centralized exchange. You do not own the funds on the exchange. Those are simply numbers on a screen that represent an IOU from Binance to you. The only way to "own" your cryptocurrency is to have the private keys for the wallet where that cryptocurrency is stored.
Another risk of keeping money on an exchange is that your account could get hacked and the funds drained from it. This is rare, but it does happen and it's really unfortunate when it happens.
To summarize, Binance is suspending USD bank transfers for an unstated reason. It's likely due to criminal charges potentially being brought against top executives of the exchange in relation to potential money laundering that occurred on the exchange.
The good news is that suspension of USD bank transfers does not impact that many Binance customers. Binance has stated that only 0.01% of accounts used USD bank transfers. It's also important to note that this suspension will not apply to Binance.US. It will only apply to Binance, which is the international version of the cryptocurrency exchange that Americans are forbidden from using.
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