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Binance US, the American branch of the well-regulated cryptocurrency exchange Binance, has made a significant change in its terms of service. Following an investigation and lawsuit by the Securities and Exchange Commission (SEC), Binance US announced that its users’ funds are no longer covered by the Federal Deposit Insurance Corporation (FDIC) insurance.
User Funds Removed from FDIC Insurance Coverage
According to Decrypt, Binance, one of the largest cryptocurrency exchanges, updated the terms of service for its American counterpart, Binance US, stating that users’ funds are no longer covered by FDIC insurance.
Under the new terms of service, Binance US users’ funds in the cryptocurrency exchange are no longer insured by FDIC. This change was made in response to a request from the FDIC.
SEC vs Binance
In early June, the SEC filed a lawsuit against Binance, Binance US, and its founder Changpeng Zhao, alleging violations of federal securities laws. The US-based regulatory agency accused Binance of falsely declaring trading controls and engaging in unregistered securities sales, thus violating investor protection rules.
The SEC also claimed that Zhao and Binance secretly controlled the operations of Binance US. Additionally, the SEC alleged that Binance secretly transferred customer funds to a separate company called Merit Peak Limited, which was secretly controlled by Zhao.
Following the lawsuit, SEC Chairman Gary Gensler stated, “We allege that with thirteen different charges, Zhao and Binance engaged in conflicts of interest, lack of disclosure, and knowingly violated the law. The public should avoid depositing their hard-earned assets into these platforms or illegal platforms.”
As a result of the SEC’s lawsuit, Binance also attracted the attention of regulators in other countries and was forced to withdraw from operations in certain countries.