Binance.US, the American arm of cryptocurrency exchange giant Binance, has halted the ability for users to withdraw US dollars from the platform according to updated terms of service.
“In the event that customers wish to withdraw U.S. dollar funds from their account, they may do so by converting U.S. dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn,” the terms page said.
The move comes as Binance faces intensifying regulatory pressure from US authorities including the Securities and Exchange Commission (SEC). In early June, the SEC obtained a court order to freeze Binance.US assets, leading the exchange to halt dollar deposits at the time.
Users looking to withdraw dollar funds from Binance.US accounts will now need to first convert holdings to stablecoins or other cryptocurrencies before withdrawing, the updated terms outline. Stablecoins like Tether are digital assets pegged to the US dollar.
Binance.US has yet to release an official statement on the withdrawal halt. The change was first reported by Coindesk earlier today.
The inability to directly withdraw dollars marks the latest escalation in Binance’s ongoing battle with US regulators. The SEC filed a lawsuit against Binance, founder Changpeng Zhao, and the US exchange in mid-June alleging the company engaged in securities fraud and unregistered trading activities.
Specifically, the SEC claims Binance and its executives misled investors and operated an unregistered securities exchange in violation of federal laws. The 13 charges allege Binance made “false, misleading, and incomplete statements” regarding its market oversight while also inflating trading volumes and misappropriating customer funds.
At the time, Changpeng Zhao dismissed the lawsuit as “without merit” and claimed regulators were spreading misinformation. However, Binance has since strengthened Know Your Customer verification processes and sought to improve regulatory compliance.
The company also faces scrutiny from the US Justice Department, Commodity Futures Trading Commission, and IRS in addition to various state regulators. The mounting legal pressure has already led Binance to stop offering futures and derivatives trading for US residents.
Analysts say the latest dollar withdrawal halt shows US authorities are continuing to turn up the heat on Binance and its domestic arm. Efforts to restrict dollar outflows could be intended to prevent capital flight as the regulatory scrutiny intensifies.
Binance became the world’s largest cryptocurrency exchange by volume thanks to its broad array of assets and lax oversight. However, the company is now facing backlash as US and international regulators seek to implement stricter controls over the nascent crypto industry.
How the escalating legal battle will impact Binance and its global user base remains uncertain. For now, US-based users will need to convert holdings to withdraw funds, adding extra friction and costs. But if regulators continue to pursue aggressive enforcement actions, the exchange’s future viability could be at risk.