By Michael Scott
Binance is considering suing Checout.com following its decision to discontinue offering support services to crypto exchange Binance Connect. The consideration arises from Wednesday, August 16, the decision by Checkout.com to terminate the partnership.
Binance Considers Legal Action Against Checkout.com
Binance executive admitted on Friday, August 18, willingness to initiate legal action against the payment provider. The move to initiate the legal dispute is attributed to the letters penned by Checkout.com to Binance on August 9 and 11.
In the review of the latest development as captured in a Forbes publication, Checkout.com chief executive Guillaume Pousaz terminated the partnership, citing the ongoing legal challenges facing Binance. The executive added that Binance is battling various regulators’ actions and active orders in several jurisdictions.
Pousaz cited various concerns against Binance. He was unconvinced by Binance, citing anti-money laundering, sanctions, and exercising compliance controls.
Binance executive cast doubt on the Checkout’s argument. He considered the purported basis for terminating the partnership contravening the initial agreement, necessitating legal action. The executive restated that Binance Connect would still offer on-ramp and off-ramp services.
Binance Connect Shuts Down
The executive regretted that the terminated business relationship prompted the crypto exchange to pull down Binance Connect. The shutdown crypto exchange facilitated the purchase and sale transaction till Wednesday, August 16.
Bitcoin Connect began operations in March 2022, with the platform providing payment for fiat-to-crypto services. As such, it bridges the digital asset firms to the traditional finance (TradFi) system. As such, Bitcoin Connect supports over 50 cryptos and fiat-based transactions.
Forbes publication cites Checkout.com’s revelation that Binance constitutes a critical customer. It indicated that Checkout.com would 2021 handle transactions with an approximated value of $2 billion monthly.
The move to open legal proceedings against Checkout.com arose from the debanking suffered by Binance operations in the past months. Also, Binance admitted its branches are struggling to secure partners globally. The inability to establish reliable partnerships is hampering operations in various territories forcing temporary suspension and pause in various markets.
Binance Loses Euro Banking Partner
Binance had, in a June announcement, revealed that the euro banking partner Paysafe Payment Solutions was terminating its support for Europe operations. A similar scenario would arise in Australia, where the local branch suffered a cutoff from the country’s banking system. The abrupt decision by Australia’s partners caught Binance unawares, as they neither served Binance with prior consultation nor warning.
The United States has posed severe challenges for Binance.US. In the past, the independently run crypto exchange has admitted difficulties in securing banking partners. The experience arose following the implosion of two critical partners – Signature Bank and Silvergate Capital. Binance lost the two partners at the height of the banking crisis witnessed at the onset of 2023 in the United States.
Binance Considers Acquiring Bank to Resolve Debanking Challenges
The ongoing banking crisis prompted Binance chief executive Changpeng Zhao to consider acquiring a bank. The executive revealed in an interview that acquiring a bank would end the repeated disruption whenever a strategic banking partner suddenly terminates the partnership.
Beyond confronting debanking risks, Binance operations are hampered by endless legal troubles. Two months ago, the Securities and Exchange Commission (SEC) initiated a June 5 lawsuit alleging Binance and chief executive Zhao contravened federal securities laws. SEC, chaired by Garry Gensler, indicated that Binance profited from offering unregistered securities to the US customers.
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