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Binance CEO Changpeng ‘CZ’ Zhao categorized as false a Bloomberg report suggesting that Binance is considering delisting certain U.S.-based tokens like the stablecoin USDC.
A person claiming to be familiar with the matter earlier told Bloomberg that the exchange is reviewing investments and banking relationships in the United States and will consider delisting crypto assets from U.S.-based projects.
Key Binance Connections Include Signature Bank and Aptos Labs
While CZ has denied the report, he earlier tweeted that Binance is reviewing strained relations in jurisdictions with regulatory uncertainty.
One of the first signs of strained U.S. business relations was an amended agreement between Binance and Signature Bank in New York to limit USD SWIFT transfers to $100,000 or more, in a move that would affect 0.01% of customers. Binance later announced the suspension of USD bank transfers that would also affect 0.01% of its customers. The similarity in the customer base size led to speculation that the suspension could be related to Signature Bank.
Not long after that, trading firm Statistica Capital putatively sued Signature Bank because of its alleged knowledge of fraud allegedly committed by former FTX CEO Sam Bankman-Fried.
FTX went bankrupt in November 2022 after a tweet from Zhao caused FTX customers to pull funds from the platform. After the exchange filed for bankruptcy on Nov. 11, 2022, news soon surfaced that former CEO Sam Bankman-Fried allegedly commingled customer funds with FTX’s market maker Alameda Research. Both Signature and another crypto-friendly bank Silvergate Capital are facing lawsuits for their alleged involvement in the commingling.
Regulatory pressure started mounting on Feb. 13, 2023, when the New York Financial Services Department stopped the issuance of Binance-branded stablecoin BUSD.
“Like every other blockchain company, we are conducting a careful cost-benefit analysis and will pivot our business as necessary to protect our global user base,” a Binance spokesperson told Bloomberg.
Binance could also sever ties with New York-based auditing firm CertiK and California-based Aptos Labs as part of its review. Both U.S. firms received funding from Binance’s venture capital arm Binance Labs.
Enforcement Actions Have Led to Earlier Delistings
While CZ has dismissed delisting claims, previous regulatory crackdowns have led to certain tokens being delisted from Binance as well as other platforms.
According to Binance’s e-learning website, one of the reasons it delists tokens is if “the exchange deems conducting business with the project unacceptable or risky.” Binance removes the trading pairs before notifying customers that they must withdraw their crypto before a certain date.
While Binance does not say what happens to delisted customer assets after that, this Reddit forum suggests that the funds become inaccessible.
Binance removed the trading pairs for the FTX-created Serum token after the exchange collapse last year. Its U.S. affiliate delisted the AMP token after the U.S. Securities and Exchange Commission deemed it a security in Aug. 2022.
Last year, the SEC successfully sued decentralized content platform LBRY for offering its LBC token as an unregistered security. Crypto exchange Poloniex later delisted the asset.
Coinbase delisted XRP after the SEC sued creator Ripple Labs and its two executives in 2920 for selling it as an unregistered security.
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