Beleaguered cryptocurrency exchange Binance has lost yet another U.K. mainstream payment on-ramp while Ripple execs seek to force Binance to expose its trading data to U.S. securities regulators.
On Tuesday, HSBC’s U.K. customers reported receiving notices that the banking giant was “stopping payments from our credit cards to Binance wherever possible.” HSBC said it had taken this decision over concerns of the “possible risks” to consumers who interact with the controversial exchange.
BREAKING: HSBC, the 6th largest bank in the world, has now BANNED all payments towards Binance Exchange. pic.twitter.com/GGHLv0Czcd
— CryptoWhale (@CryptoWhale) August 2, 2021
HSBC joins an ever-widening chorus of traditional financial institutions erecting barriers between their customers and Binance. Barclays, Santander and TSB have all cut their Binance on-ramps, in part due to the Financial Conduct Authority’s (FCA) late-June warning that Binance lacked permission to “undertake any regulated activity in the UK.”
On the continent, Binance’s Clear Junction payment partner suspended pound and euro payments in July. Meanwhile, regulators from across Europe and Asia have taken issue with Binance’s skirting of securities laws, while a recent report revealed that U.S. residents had no issues accessing Binance.com despite the site’s supposed efforts to block access by U.S. customers.
There’s mounting suspicion that U.S. authorities have been quietly alerting their counterparts abroad that the regulatory hammer is about to drop on Binance and its itinerant CEO Changpeng ‘CZ’ Zhao. The prevailing theory is that the U.S. is giving other countries a heads-up to enable customers based in those countries to get their money off Binance before the storm breaks.
If Binance is found to have broken U.S. law by, say, evading taxes or facilitating money laundering, CZ and other employees could face charges under the U.S. RICO (Racketeer Influenced and Corrupt Organizations) Act, which carries penalties of up to 20 years behind bars (per count).
Binance asked to open the books
Those U.S. authorities will soon have extra material through which to comb for signs of illegal activity thanks to a court case involving Brad Garlinghouse, CEO of Ripple Labs Inc. Garlinghouse and Ripple founder Chris Larsen have been accused by the U.S. Securities and Exchange Commission (SEC) of aiding and abetting the sale of unregistered securities.
Garlinghouse and Larsen were personally named in the suit filed with the U.S. District Court for the Southern District of New York last December. The suit centers on the sale of billions of Ripple tokens (XRP), some of which the SEC suspects were purchased by U.S. residents and/or distributed by the company in return for non-cash considerations.
The SEC maintains that the XRP tokens—along with tokens other companies have issued via initial coin offerings—are unregistered securities and is seeking disgorgement of “all ill-gotten gains” derived from the sale/distribution of the XRP.
For his part, Garlinghouse maintains that his personal token sales were “overwhelmingly made on digital asset trading platforms outside the United States,” putting them beyond the SEC’s jurisdiction. Having previously sought information from a number of these exchanges, Garlinghouse’s attorneys filed papers this week to add Binance Holdings Limited to this international discovery list. On Tuesday, U.S. Magistrate Judge Sarah Netburn granted this request.
BREAKING: Ripple CEO Brad Garlinghouse has filed a motion with the Securities and Exchange Commission (SEC) to obtain documents from Binance. pic.twitter.com/fWyM1wqCIZ
— CryptoWhale (@CryptoWhale) August 2, 2021
The suit’s discovery phase extends through October 15, and it remains to be seen whether CZ’s very public embrace of Binance’s compliance ‘journey’ will extend to cooperating with a U.S. federal court discovery request. The SEC will probably wonder what’s going on when they receive boxes of pages entirely blacked out by redactions, while CZ tweets self-congratulatory photos of himself buying ‘compliance toner’ at Office Depot.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.