Binance’s U.S.-based subsidiary is having a hard time finding a new banking partner in the face of regulatory headwinds.
According to an April 8 report from The Wall Street Journal, Signature Bank’s shutdown last month left Binance.US without a key banking partner.
Sources with knowledge of the matter said that the exchange was using at least one middleman to custody funds, but holding funds at these intermediaries could slow down the process of moving them.
For now, Binance.US is storing its customer’s fiat at Nevada-based Prime Trust, which is in turn stored with the firm’s network of banking partners.
A number of the platform’s users reported having trouble withdrawing their funds last month, with some waiting for over 10 days to have their requests processed. Binance.US acknowledged that a “small subset of users” had these services disrupted at the time, and said it expected to restore functionality within the next day.
As of late evening Sunday, the exchange’s status page listed U.S. dollar deposit and withdrawal outages through services like debit cards, Apple Pay and Google Pay.
“Due to recent developments in the banking industry, Binance.US is transitioning to new banking and payment service providers over the next several weeks. Some USD deposit services will be temporarily impacted during the transition,” read the notice.
Binance.US attempted to establish direct banking relationships with several firms, including Cross River Bank, that recently partnered with stablecoin issuer Circle. Pennsylvania-based Customers Bancorp Inc was another firm that turned Binance.US down, said the people.
One of the reasons that the banks were unwilling to partner with Binance.US was concerns over the regulatory risk posed by the exchange.
The Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its founder Changpeng Zhao (CZ) for allegedly violating U.S. laws in operating its exchange. CZ responded to the CFTC’s 74-page complaint in a blog post, calling it “an incomplete recitation of facts.”
Although the lawsuit sparked fear in the minds of several Binance users, evidenced by a large number of withdrawals from the exchange shortly after, on-chain analysts believe that investors are still confident in Binance’s standing.