Cons of Binance

By cryotosensei | CryptoSensei | 6 Sep 2023

Cons of Binance

Binance faces regulatory pressure in many countries around the world. It withdrew its license application in Germany about a month ago. (Reference 1). Similarly, it left the Netherlands in July 2023 because it failed to secure a virtual asset service provider (VASP) license from the Dutch regulator. (Reference 2). It also withdrew its applications from Belgium and Cyrus due to similar reasons. (Reference 3).
Binance has run foul of regulatory guidelines and been taken to task. For instance, in March 2023, the US Commodity Futures Trading Commission (CFTC) took legal action against Binance for violating the Commodity Exchange Act (CEA). (Reference 4). Specifically, Binance founder, CZ, was charged with wilful evasion of federal law while Binance was charged for operating an illegal digital asset derivatives exchange. (Reference 5). Likewise, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance for allegedly soliciting American customers to trade assets illegally on unregistered platforms this June. (Reference 6). It was also investigated by French authorities for suspected money laundering. All this suggests that it could be risky to trade with Binance because because a day may come where regulatory authorities demands Binance to freeze its users’ assets without judicial consent.
An immediate implication of Binance.US’s lawsuit was that it took away crypto-fiat trading pairs from its platform and encouraged its users to swap their US dollars to stablecoins. (Reference 7). It also warned its users that they might not be able to withdraw US dollars in the future. (Reference 8). This introduces pain points to the trading process and makes the user experience less than seamless. Not to mention how this makes users lose confidence in the platform.
Binance’s association with shady practices is not just rhetorical. Last year, Reuters found out that Binance had acted as an intermediary for the laundering of at least $2.35 billion in illicit funds, thus helping undesirable characters like fraudsters, drug traffickers and hackers achieve devious goals. Some users may not wish to use a platform that has its moral integrity called into question. (Reference 9)

Reference 1:

https://reddit.com/r/CryptoCurrency/s/7peh0Jexkv

Reference 2:

https://www.coindesk.com/business/2023/06/16/binance-to-quit-netherlands-after-failing-to-acquire-license/?outputType=amp

Reference 3:

https://www.bloomberg.com/news/articles/2023-07-26/binance-withdraws-request-to-bafin-for-german-regulatory-approval?in_source=embedded-checkout-banner

Reference 4:

https://crypto.news/what-happens-if-binance-collapses/

Reference 5:

https://www.cftc.gov/PressRoom/PressReleases/8680-23

Reference 6:

https://crypto.news/sec-sues-binance-and-cz-for-securities-violations/