Binance US Announces Cessation Of Operations In Washington, Here’s Why
In a significant development, Binance.US has announced that it will cease operations for customers in Washington state. This decision comes in the wake of regulatory developments that have put the cryptocurrency exchange at odds with local authorities. Moreover, the crypto community exchange will cease operations in August 2024.
Binance.US Moves Out Of Washington
Binance.US has set a deadline of August 20, 2024, for closing all accounts based in the state. The reason for dismissal of operations in the state as is connected to the operating license being expired. Furthermore, the suspension in Washington is not an isolated incident.
The exchange is currently not available to customers in several other states and regions. These include Alaska, American Samoa, Hawaii, Maine, New York, Oregon, Texas, Vermont, Guam, Northern Mariana Islands, and the U.S. Virgin Islands. The exchange’s struggle with regulatory compliance is a nationwide issue.
Earlier this month, financial market regulator of North Dakota revoked the money transmitter license granted to the exchange. This revocation marked the seventh state to take such action, joining Alaska, Florida, Maine, North Carolina, and Oregon. The order issued on June 4, 2024, by North Dakota regulator emphasized that Binance.US “has not continued to meet the qualifications or satisfy the requirements that apply to an applicant for a new money transmission license.”
The revocation of licenses in multiple states underscores the regulatory hurdles exchange faces. The North Dakota regulator justified the license cancellation as “necessary and appropriate in the public interest for the protection of citizens to restrain unlawful acts, practices, or transactions.”
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Changpeng Zhao’s Involvement
Compounding these regulatory challenges is the involvement of Changpeng “CZ” Zhao, the co-founder and former CEO of Binance. Zhao indirectly owns the Binance.US exchange and has been described as exercising control over the entity. Zhao, now a convict, remains a majority shareholder of Binance.com despite his incarceration.
Hence, his connection to Binance.US has raised additional regulatory scrutiny and concerns about the autonomy and governance of the U.S. entity. Furthermore, in March 2024, the U.S. Securities and Exchange Commission (SEC) accused the CEX of failing to provide adequate information regarding the custody of customer assets.
In an update submitted jointly to a District Court in Washington, D.C., the SEC expressed dissatisfaction with the crypto exchange’s responses to inquiries. Specifically, the SEC raised concerns about whether Binance employees located outside the U.S. could access customer assets held by Binance.US through Amazon Web Services servers. The SEC had launched its investigation in June 2023 to examine whether Binance.US has maintained full control over customer assets.
Moreover, the SEC’s primary focus is on potential access by employees of Binance Holdings Limited to these funds, which raises concerns about the security and protection of customer assets. However, Binance.US responded to the SEC’s allegations by asserting its compliance with all regulatory requirements.
In addition, the exchange emphasized that it has furnished a comprehensive range of documents and dismissed claims regarding the security of customer funds as unfounded. Binance.US maintains that it has not only met but exceeded its legal obligations in addressing the SEC’s inquiries.
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