Binance Shocks Crypto World with Temporary Halt on US Bank Transfers – Here's What's Going On
Binance has announced that it is temporarily suspending US dollar withdrawals and deposits for international customers beginning February 8.
In a recent tweet, the largest crypto exchange in the world said that they "will temporarily suspend all USD bank transfers" starting Wednesday. Other transfer methods will not be affected, the exchange added, noting that it only impacts "a small proportion" of their users.
The exchange did not provide additional details but said they "are working hard to restart the service as soon as possible."
In a separate tweet, Binance US, a unit of the company that’s regulated by the Treasury Department’s Financial Crimes Enforcement Network, said that it’s not affected by the suspension. Thus the move applies only to non-U.S. customers who transfer money to or from bank accounts in dollars.
The move comes as Binance has been facing banking challenges in the United States. Last month, the exchange's banking partner Signature Bank raised transaction minimums for dollar transfers, announcing that it would only process trades by users with USD bank accounts over $100,000.
At the time, Binance said it was “actively seeking” a new partner to process its SWIFT payments. Only “0.01% of our average monthly users are serviced by Signature Bank,” the exchange said in an email sent to impacted users.
Signature Bank, which is headquartered in New York, said back in December that it intends to reduce its exposure to clients operating in the crypto space by shedding about $10 billion of deposits.
Signature Bank and Silvergate are two of the biggest crypto banks. However, the duo was hit hard by the crypto meltdown last year that saw around $2 trillion worth of value wiped out of the crypto market.
Both banks have received billions in loans from the Federal Home Loan Banks, a system originally designed to support housing finance and community investment, following the collapse of the cryptocurrency exchange FTX.
Signature Bank received nearly $10 billion in loans from its local home-loan bank in the last quarter of 2022 while Silvergate received at least $3.6 billion. Signature's loans are more than double its previous highest sum in several years, while 2022 marked the first year for Silvergate to tap home-loan banks.
As reported, Silvergate suffered a bank run following the collapse of FTX. Aside from taking loans, the crypto bank also had to sell $5.2 billion of debt securities it was holding on its balance sheet at a significant loss to cover around $8.1 billion in user withdrawals. As a result, it incurred a $718 million loss, which reportedly exceeds the bank’s total profits since 2013.