Crypto exchange Binance.US said on Thursday it is suspending US dollar deposits and that its banking partners are preparing to pause fiat dollar withdrawal channels as early as June 13, just days after US regulators sued Binance and its CEO Changpeng Zhao.
The US arm of the world’s largest crypto exchange said in a tweet at 10:33 p.m. EDT (0233 GMT Friday) that the move comes as it is taking “proactive steps” in its transition to a crypto-only exchange for the time being.
Trading, staking, deposits and withdrawals in crypto would remain fully operational, the exchange said in a notice to its customers.
On Monday, the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its founder Zhao, and subsequently sued Coinbase (COIN.O), the largest US cryptocurrency platform, a day later.
The developments mark a dramatic escalation of a crackdown on the industry by US regulators, following the implosion of FTX last year.
US financial regulators had said earlier on Thursday that they supported a freeze on Binance’s assets, according to a US SEC filing to a federal court and made public.
“Binance.US is a considerably smaller business than their international group. Halting of withdrawals is obviously going to create or spur quite a bit of worry and panic,” said Matthew Dibb, COO of Singapore crypto platform Stack Funds.
“But day after day for the last week, Binance has been hit with various types of comments and issues from the SEC and regulators, so this was really to be expected.”
Prices of cryptocurrencies barely reacted to the news, with bitcoin last marginally lower at $26,496 during the Asian day on Friday.
It was headed for a weekly loss of about 2 per cent, after having dipped to an over two-month low of $25,350 earlier in the week as the SEC crackdown stoked nerves.
Binance’s BNB token slid 0.46 per cent to $261.46.
“The reaction has been extremely muted so far. Either the market has shrugged it off, or it hasn’t gotten a handle on it yet,” said Tony Sycamore, market analyst at IG Markets.
In its Thursday tweet, Binance.US said that the SEC’s take on cryptocurrency is “extremely aggressive and intimidating”, adding that it will continue to “vigorously defend ourselves, our customers, and industry against the meritless attacks of the SEC”.
The crypto industry has attacked US SEC chair Gary Gensler in recent days following the lawsuits, though he has since rejected criticism that the agency is trying to crush the crypto industry.
“As regulatory scrutiny continues, exchanges, stablecoin issuers and industry players will further specialise in different roles to collectively provide the best user experience,” said Wayne Huang, Co-founder and CEO of XREX Inc, a blockchain-enabled financial institution operating the XREX USD-crypto exchange.