Binance.US accounts ‘not eligible’ for FDIC insurance protections

Binance US updated its terms of service to comply with the FDIC and finalize its transition to a crypto-only exchange

article-image

Igor Faun/Shutterstock modified by Blockworks

share

Binance.US made some changes to its terms of service on Monday.

In an email sent to customers and shared with Blockworks, Binance US removed the language stating that deposits were insured by the Federal Deposit Insurance Corporation. 

Additionally, customers must convert their US dollars to either a stablecoin or other digital asset in order to withdraw from the exchange. 

“Your Accounts and digital assets are not eligible for FDIC insurance protections. In the event you wish to withdraw US dollar funds from your Account, you may convert such US dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn,” the terms of service said.

Binance explained in the customer email that it changed the FDIC language in “accordance with guidance received” from the FDIC.

“Digital Assets are not legal tender, are not backed by any government, and accounts and value balances are not subject to protections or insurance provided by the FDIC or the Securities Investor Protection Corporation,” states the terms of service.

Binance US announced back in late July that it transitioned to a crypto-only exchange. 

“While Binance.US does not support USD services for the time being (until we onboard stable banking partners), you can open an account with a trusted platform that allows you to buy crypto with USD,” the exchange wrote in a post from two weeks ago.

As a result of a lawsuit from the US Securities and Exchange Commission, Binance.US announced on June 13 that it would be pausing customer withdrawals to transition to an all-crypto exchange due to “banking partners [who] have signaled their intent to pause USD fiat channels.”

Read more: Binance hit with class-action lawsuit over alleged market manipulation

Ten days later, Binance US announced that it was restoring USD withdrawals, though it warned that it may discontinue USD withdrawals and announced that it was seeking “additional USD deposit/withdrawal bank partners.”

The FDIC, in recent months, clarified that it does not cover crypto custodians, exchanges, or wallet providers. The agency specifically covers insured banks. 

The agency sent a letter to OKCoin — now OKX — in June, accusing CEO Hong Fang and other executives of making false or misleading statements” about FDIC insurance.

Earlier this month, the Federal Trade Commission and Commodity Futures Trading Commission went after bankrupt lender, Voyager, and its former CEO Stephen Ehrlich. 

The FTC alleged that both Voyager and Ehrlich made deceptive claims around FDIC insurance, claiming that the customers were protected. However, the FTC stated that both Ehrlich and Voyager were “well aware” that Voyager itself was not insured, and therefore customer deposits were not protected.

Binance.US did not immediately respond to a request for comment.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral

article-image

Sponsored

Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM

article-image

The side events were the places to be at Consensus 2024, according to attendees

article-image

Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them

article-image

I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right

article-image

Also, the ETF hype train can count out at least one member