Binance.US Relying on Middleman To Store User Funds As Crypto Exchange Struggles To Find Banking Partner: Report
The US arm of leading crypto exchange Binance is reportedly searching for a new banking partner after Silvergate Capital and Signature Bank collapsed last month.
The Wall Street Journal reports that Binance.US is struggling to find a bank that will directly hold its customers’ cash following the failure of Signature and Silvergate, which were the two most widely used banks for US crypto firms.
The exchange reportedly failed to establish direct banking relationships with New Jersey-based lender Cross River Bank, which accommodates crypto and financial technology firms, and Pennsylvania-based regional bank Customers Bancorp Inc.
People familiar with the matter reportedly say that some banks are reluctant to do business with Binance.US partly because of regulatory risks, now that Binance and its CEO Changpeng Zhao face charges for allegedly violating the compliance rules of the Commodity Futures Trading Commission (CFTC).
As a workaround for the situation, Binance.US is reportedly using at least one middleman to store its customers’ funds. The exchange is said to rely on crypto services firm Prime Trust, which stores funds from clients with its network of banking partners.
The sources say that the process of moving and sending funds may slow down as a result of customers’ cash being held at the middleman’s banks. Users also experience disruptions in some services. Apple Pay and Google Pay deposits, for instance, are temporarily unavailable.
Says the Binance.US website,
“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.”
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