Binance’s wings clipped by Signature Bank, insider trading.
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The Binance exchange has had its financial wings clipped by its U.S. banking partner, while rival exchanges wonder whether Binance cares about insider trading.
Over the weekend, Binance issued an email to customers explaining that “the banking partner that services your account has advised that they are no longer able to process SWIFT fiat (USD) transactions for individuals of less than 100,000 USD as of February 1st, 2023.” The email claims that Binance is “actively seeking a new SWIFT (USD) partner to avoid any interruption of service.”
The banking partner referenced in the email is Signature Bank, whose dealings with a Binance-affiliated Seychelles-based shell company called Key Vision Development Limited were exposed last week. Key Vision was struck off the Seychelles register in September 2021, a fact that doesn’t seem to have negatively impacted its Signature relationship (at least, until now).
Binance issued a statement Sunday that the SWIFT crackdown applied to “all Signature’s crypto exchange clients,” but Binance is so far the only exchange to have publicly acknowledged Signature’s new stance. Signature’s exchange clients include Kraken, Huobi, OKX, Bitstamp, Bithumb, and eToro, none of which appear to have issued similar caveats to their users.
The $100,000 transaction minimum that Binance claims Signature has imposed is curious, to say the least, given that transactions of that scale would be far more likely to involve shady operators and, thus, should be less attractive for Signature to handle. Then there’s the striking similarity with the $100,000 minimum the operators of the controversial Tether (USDT) stablecoin require to process any fiat redemption requests.
This latter similarity has led some to speculate that Binance is now relying on the Deltec Bank & Trust in the Bahamas, which handles banking on behalf of iFinex, the parent company of both Tether and the equally dodgy Bitfinex exchange. Deltec also handled much of FTX/Alameda’s banking needs before their inglorious implosion. Deltec’s U.S. correspondent bank is Citibank, which surely must be getting tired of these associations by now.
Signature has yet to publicly comment on Binance’s announcement, which was originally reported by Bloomberg. Similarly, Binance’s normally chatty CEO Changpeng ‘CZ’ Zhao has yet to attempt to put a positive spin on the Signature setback. CZ may still be rattled from Binance being publicly shamed as the top receiving counterparty of the Bitzlato exchange, which was shut down by U.S. authorities last week for its ties to the former top ‘darknet’ marketplace Hydra.
On Monday, the crimefighters at Europol announced that five individuals connected to Bitzlato had been arrested so far, and other individuals remain under investigation. Europol stated that nearly half of the €2.1 billion ($2.3 billion) worth of crypto assets handled by Bitzlato “had links to criminal activities,” including “cyber scams, money laundering, ransomware and child abuse material.
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