The Crypto bank Silvergate cut all ties with crypto exchange Binance as reported earlier this morning when the exchange sent an email to its users stating that the platform will no longer support withdrawals and deposits via Silvergate. In our latest cryptocurrency news today, we are reading more about it.
As of now, Binance’s USD bank wire options remain discontinued as the email read:
Binance getting dumped by Silvergate? Ouch. pic.twitter.com/0Mh3xltaIg
— Eugene Ng 🌊 (@Eug_Ng) June 10, 2021
“USD deposits made to our Silvergate Bank account after 11 June 2021 (UTC 23:59) will be returned to your account within 21 working days. The returned amount may be lower due to external bank fees involved. Rest assured, we are working hard to provide an alternative USD solution.”
While it remains unclear why the crypto bank Silvergate Bank ended its partnership with Binance, the bank’s new partnership with Facebook’s project Diem could be the main reason. The major cryptocurrency embroiled in controversy as of late and faced a probe by the US Department of Justice, Internal Revenue Service, and Commodity Futures Trading Commission over tax evasion and money laundering. As the main issuer of Diem’s stablecoin, it is possible that the California-based bank is looking to distance itself from being associated with Binance and avoid any regulatory troubles.
— Silvergate Bank (@silvergatebank) June 10, 2021
Diem relocated the major operations back to the United States, and withdraw its payment system license application from Switzerland so is important to note that Binance was banned in the United States for two years now. As Binance searches for a new US dollar provider, the exchange will continue to offer bank transfer options in other fiat currencies like the Pound, Euro, and the Australian dollar. Other payment methods such as credit, debit, and P2P methods are also available. Binance US on the other hand will continue to work with Silvergate as one of its banking partners. As a legally separate entity, Binance.US will unlikely face the same regulatory scrutiny as its parent company that explains why Silvergate chose to continue working with the US branch.
As reported recently, Binance got under investigation by the IRS and the Department of Justice for money laundering and tax evasion. According to Bloomberg, the federal probe is still confidential with both agencies looking for information from individuals that have insight into Binance’s business. The report accuses Binance of succeeding without strong government oversight with a lack of corporate headquarters and incorporation in the Cayman Islands that levies no taxes.
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