Home - Blockchain - Binance Stops US Bank Transfers, Shocked Crypto Community-What’s Happening

James Carter

February 7, 2023

Binance Stops US Bank Transfers, Shocked Crypto Community-What’s Happening

Beginning on February 8, Binance will no longer permit international users to withdraw or make deposits in US dollars, as the company has indicated it will do so temporarily.

The most significant cryptocurrency trading platform in the world has announced, via a tweet, that beginning on Wednesday, they “will temporarily suspend all USD bank transactions.” Other methods of transmission would not be impacted in any way, according to the exchange, which also mentioned that this issue only affects “a small proportion” of its members.

The exchange could not provide any further information, but they did say that they were “working hard to reinstate the service as quickly as possible.”

Binance Stops US Bank Transfers, Shocked Crypto Community

In a subsequent tweet, Binance US, a division of the firm that is regulated by the Financial Crimes Enforcement Network of the Treasury Department, stated that it is unaffected by the suspension. The statement was made by the company. Therefore, this change will only affect customers located outside of the United States who move money into or out of their bank accounts in dollars.

This change comes at a time when Binance has been having difficulty obtaining banking services in the United States. The banking partner of the exchange, Signature Bank, increased the transaction minimums for dollar transfers at the beginning of the month and said that it would only conduct trades by users with USD bank accounts that were more than $100,000.

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Binance had previously stated that it was “actively seeking” a new partner to handle the processing of its SWIFT payments at the time. In an email that was issued to subscribers who were adversely affected by the exchange’s actions, it was stated that “0.01% of our average monthly users are serviced by Signature Bank.”

Back in December, New York-based Signature Bank announced that it plans to limit its exposure to customers operating in the cryptocurrency area by losing around $10 billion of deposits. The bank has its headquarters in New York.

Two of the most prominent cryptocurrency banks nowadays are Signature Bank and Silvergate. However, the two were dealt a severe blow by the cryptocurrency market crash that occurred in 2018, which resulted in the loss of approximately $2 trillion dollars’ worth of value.

After the failure of the cryptocurrency exchange FTX, both banks have been granted loans totaling billions of dollars by the Federal Home Loan Banks, which are part of a system that was initially created to assist with home finance and community investment.

Both Signature Bank and Silvergate got at least $3.6 billion in loans from their respective local home-loan banks during the final quarter of 2022. Signature Bank received nearly $10 billion in loans. While 2022 was Silvergate’s first year working with home-lending institutions, Signature’s loan volume is more than quadruple that of its previous highest total in the past few years.

Following the failure of FTX, reports indicate that Silvergate had a run on the bank. In addition to taking out loans, the cryptocurrency bank was forced to liquidate $5.2 billion worth of debt instruments that it held on its balance sheet at a considerable loss in order to cover about $8.1 billion in withdrawals made by customers. As a consequence of this, it experienced a loss of $718 million, which, according to reports, is greater than the sum of the bank’s total profits since 2013.

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