The world’s largest cryptocurrency exchange, Binance, recently revealed that it will be temporarily halting all USD bank transfers starting February 8th.
The company made the announcement on Twitter on February 6th, specifying that this move will not impact any other transaction methods.
The company is yet to offer an explanation for the USD suspension, however, in a Tweet, Binance wrote that the crypto-exchange is “working hard to restart the service as soon as possible.”
The company’s CEO Changpeng Zhao remarked that USD transfers make up for less than 0.01% of the total transactions on Binance’s platform.
Luckily for most this suspension will not include the exchange’s American branch, Binance.US.
Why US Dollar Transfers Were Halted
According to Bloomberg, the suspension of USD bank transfers could be due to an issue with its U.S. banking partner, Signature Bank.
Cryptocurrency exchanges like Binance rely on banking partners to handle the transfer of funds between blockchain wallets and actual bank accounts. In January, Signature Bank indicated that it would reduce its acceptance of blockchain deposits and exposure to cryptocurrency assets.
At the time, the bank stated that it would only process cryptocurrency transactions above $100,000.
The FTX Crash Could Have Potentially Affected Bank’s Trust In Exchanges
Last year’s FTX collapse has undoubtedly made large banking institutions more apprehensive when dealing with cryptocurrency exchanges.
The crash that made over $10 billion in customer funds disappear out of nowhere has sort of left a bad rep in FTX’s rival companies.
Perhaps for this reason, Binance is finding it difficult to work with an American-based bank willing to do business with a company that resembles FTX.
In fact, the company’s CEO, Changpen Zhao, goes out of his way to make sure that his brand does not get attached to Sam Bankman-Fried’s former company in any way.
However, an undeniable truth is that Binance was in fact involved in the sequence of events that sent FTX to the ground. CZ’s decision to short all of his company’s FTT ended up being the spark that sent the rival exchange in flames.