Troubled crypto exchange Binance continues to encounter challenges, as the US financial regulator filed lawsuits against the cryptocurrency exchange.

CNBC reported that Mastercard will no longer offer Binance-branded cards in Latin America and the Middle East, which let customers user their crypto to purchase goods, citing a Binance tweet on Twitter/X on Thursday.

It comes after Visa ended a similar card tie-up with Binance in Europe in July, but Binance insisted the Mastercard move means only “a tiny portion of our users (less than 1 percent of users in the markets mentioned) are impacted by this.”

Mastercard move

The Binance Card (Mastercard), like most debit cards, has been utilised by Binance’s users to pay for basic daily expenses but in this case, the cards are funded with crypto assets.

“Binance accounts around the world are not affected,” Binance tweeted. “Where available, users can also shop with crypto and send crypto using Binance Pay, a contactless, borderless and secure cryptocurrency payment technology designed by Binance.”

But the withdraw of cards show how traditional financial institutions are growing wary of working with Binance as it faces intense regulatory scrutiny and wider concerns around financial compliance within the crypto industry.

Mastercard confirmed that it is ending the partnership, with a spokesperson telling CNBC that from 22 September, four pilot Binance co-branded Mastercard card programs the company had with Binance in Argentina, Brazil, Colombia and Bahrain “will no longer be in use.”

“This provides cardholders with a wind-down period to convert any holdings in their Binance wallet,” the Mastercard spokesperson told CNBC. “There is no impact on any other crypto card program.”

Visa, meanwhile, also moved to distance itself from Binance.

Visa ended a similar card tie-up with Binance, as it ceased issuing new co-branded cards with the firm in Europe as of July, a spokesperson for the company reportedly told Bloomberg.

Regulatory pressure

Binance is currently embroiled in a tussle with the US financial regulator.

Back in June, the US Securities and Exchange Commission (SEC) filed lawsuits against both Coinbase and Binance, as well as against the later’s founder and CEO Changpeng Zhao.

Binance chief executive Changpeng Zhao. Image credit: Binance

Prior to that it was reported that a senior Binance executive allegedly had primary control over five bank accounts belonging to the cryptocurrency firm’s supposedly independent US affiliate.

The SEC had listed 13 charges against Binance, Zhao and the operator of its purportedly independent US Exchange.

The SEC alleged that, while Zhao and Binance publicly claimed that US customers were restricted from transacting on Binance.com, Zhao and Binance in reality subverted their own controls to secretly allow high-value US customers to continue trading on the Binance.com platform.

Furthermore, the SEC alleged that, while Zhao and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for US investors, Zhao and Binance secretly controlled the Binance.US platform’s operations behind the scenes.

The SEC also alleged that Zhao and Binance exercise control of the platforms’ customers’ assets, permitting them to commingle customer assets or divert customer assets as they please, including to an entity Zhao owned and controlled called Sigma Chain.

The SEC’s complaint further alleged that BAM Trading and BAM Management US Holdings, Inc. (“BAM Management”) misled investors about non-existent trading controls over the Binance.US platform, while Sigma Chain engaged in manipulative trading that artificially inflated the platform’s trading volume.

And the SEC alleged that the defendants concealed the fact that it was commingling billions of dollars of investor assets and sending them to a third party, Merit Peak Limited, that is also owned by Zhao.

Protective order

But Binance is pushing back against the US financial regulator, and earlier this month filed for a protective court order against the SEC.

Binance alleged the SEC requests for information were “over broad” and “unduly burdensome.”

The court filing was made in the US District Court of Columbia, where BAM Trading, Binance US’s operating company and BAM Management said the group had already provided sufficient information to the regulator

The protective order seemingly tries to limit the SEC, among other things, to four depositions from BAM employees, and to drop the deposition of BAM’s chief executive and of its chief financial officer, without naming anyone.

But the regulatory pressure is having a knock-on affect.

CNBC reported that last week, Checkout.com dropped Binance as a customer, citing “reports of regulators actions and orders in relevant jurisdictions,” “inquiries from partners,” and concerns over the firm’s anti-money laundering, sanctions and compliance controls.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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