Media reports withdrawal of FDIC insurance for Binance.US deposits

Binance.US no longer provides FDIC insurance for deposits. This is stated in a client notification that was obtained by Decrypt.

\n\n

The changes are set forth in the platform’s updated Terms of Service. They are in line with the regulator’s guidance.

\n\n

In a now-deleted post from December 24, 2019 on the blog, the company said that ‘all deposits in USD are held in consolidated custodial accounts at several banks that are FDIC-insured. […] The coverage limit is $250,000’.

\n\n

The updated Terms of Service now state: ‘Your account and digital assets are not covered by FDIC insurance.’

\n\n

The document also states that users will no longer be able to withdraw USD without first converting them into stablecoins or cryptocurrency.

\n\n

In October, FTC filed a lawsuit against the broker in the digital-asset space Voyager Digital and its former CEO Stephen Ehrlich. The agency noted, among other things, that the defendants misled clients about FDIC insurance coverage.

\n\n

In August 2022, the Federal Deposit Insurance Corporation filed similar claims against FTX.US.

\n\n

On June 5, the SEC filed a lawsuit against Binance and its CEO Changpeng Zhao, bringing 13 counts, including the sale of unregistered securities. On June 6, the regulator filed a motion to freeze the exchange’s U.S. assets.

\n\n

On June 9, users lost the ability to deposit dollars, prompting selling by those seeking to withdraw funds in fiat. In the platform’s wake, a discount formed in Bitcoin quotes against the dollar — the measure reached about $2,200 (7.3%).

\n\n

On June 17, the SEC and Binance reached a settlement over client funds in the United States. The exchange resumed withdrawals of assets, but warned that the situation could change.

\n\n

Subsequently the agency charged Binance.US with a reluctance to cooperate. According to the regulator, the platform’s actions violated the agreement prohibiting withdrawals of funds abroad.

\n\n

According to the agency, the exchange’s holding company BAM delayed preparing the requested documents. The court refused to compel the U.S. unit of Binance to provide the SEC with enhanced information regarding the handling of client assets. The company itself called the regulator’s requests ‘too broad’ and ‘unduly burdensome’.

\n\n

In September, Binance, Binance.US and the platform’s head Changpeng Zhao filed a motion to dismiss the SEC’s suits, noting the Commission’s arguments were implausible.