Binance’s regulated crypto arm, Binance Connect, is set to close on August 16, as confirmed by a company spokesperson. The move comes as part of Binance’s strategic realignment, leaving both crypto investors and businesses pondering the implications. Launched as Bifinity in March 2022, Binance Connect becomes the newest casualty in the ever-changing crypto landscape.
Binance Connect, formerly known as Bifinity, launched on March 7, 2022, facilitating fiat-to-crypto payments between traditional finance and crypto businesses. With support for 50 cryptocurrencies and major payment methods like Visa and Mastercard, the service quickly made its mark. However, its launch coincided with concerns from the UK’s FCA about a $36 million convertible loan provided by Bifinity to Nasdaq-listed Eqonex, raising potential beneficiary ownership issues due to Binance Group’s affiliation. Additionally, Binance Connect played a key role as the fiat-to-crypto on-ramp for Binance’s Trust wallet.
In that very month, Binance Australia halted its fiat services due to a third-party problem. Come June, German regulatory authorities declined Binance’s application for a crypto custody license. On a brighter note, July saw the firm obtaining a crypto broker-dealer license from Dubai regulators. Yet, Binance remains entangled in legal battles with the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission, accused of running an unlicensed exchange within the United States.
SEC and Commodity Futures Trading Commission investigations have targeted Binance and its founder, Changpeng Zhao. Accusations range from operating an unregistered U.S. exchange to numerous federal securities law violations. This situation emphasizes the call for well-defined crypto regulations, as the SEC examines crypto enforcement and categorizes select cryptocurrencies as ‘securities.’ The Binance case showcases the SEC’s approach, drawing parallels between traditional securities and their crypto counterparts.
Out of Binance’s worldwide customer base of 62 million, only 25 million had provided KYC documentation. Allegedly, Binance’s chief compliance officer acknowledged the intentional evasion of KYC requirements.
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