The US arm of cryptocurrency exchange Binance is struggling to find a bank to handle its customers’ cash after the failure of Signature Bank last month, the Wall Street Journal reported on Saturday, citing people familiar with the matter.
Previously, the deposits were sent to either Signature Bank or Silvergate Capital Corp, both seen as crypto-friendly banks. However, after both failed, the exchange is rushing to find a new banking partner, according to the report.
Binance.US is using at least one intermediary to store funds, the report said, adding that since the money is being held by a third party, it can slow down sending and moving funds.
The company has unsuccessfully tried to establish relationships with Cross River Bank and Customers Bancorp Inc, the report said, adding that banks are reluctant due to concerns over regulatory risk.
All three companies did not immediately respond to a Reuters’ request for comment outside normal business hours.
“We work with multiple US-based banking and payment providers and continue to onboard new partners while upgrading our internal systems to create a more stable fiat platform and offer additional services,” a spokesperson for Binance.US told the WSJ.
Last month, the US Commodity Futures Trading Commission (CFTC) sued Binance along with its CEO and former top compliance executive, alleging that they were operating an “illegal” exchange and a “sham” compliance program. Since the lawsuit, investors withdrew $1.6 billion from Binance.
Binance Holdings Ltd., branded Binance, is a global company. That operates the largest cryptocurrency exchange in the world in terms of the daily trading volume of cryptocurrencies. It was founded in 2017.
Binance was founded by Changpeng Zhao, a developer who had previously created high-frequency trading software. Binance was initially based in China, but later moved its headquarters out of China. It was shortly before the Chinese government imposed regulations on cryptocurrency trading.
In 2021, it was put under investigation by both the United States Department of Justice and the Internal Revenue Service. Based on allegations of money laundering and tax offenses. The UK’s Financial Conduct Authority ordered Binance to stop all regulated activity in the United Kingdom in June 2021.
In 2021, Binance shared client data, including names and addresses, with the Russian government.
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