The Australian division of Binance, the world’s largest and most popular digital currency exchange, caused analysts and observers to raise eyebrows in the latter half of May when the firm began selling bitcoin at a huge discount.
Binance Australia was Practically Giving Away BTC
During that time, bitcoin was trading between $27,000 and $28,000 on most platforms, though the Australia division of Binance caught everyone off guard when it began selling units for about 20 percent less. Thus, people could go onto the exchange and purchase a unit of bitcoin for just over $23,000.
A Binance spokesperson explained the matter as follows:
Due to the recent removal of fiat on-ramp services by our payment processor’s banking partner, some Australian users have been withdrawing their AUD holdings from the platform in advance of the off-ramp closure on 1 June.
The Australian dollar’s removal from the exchange went into effect on May 18 of this year. From there, it was announced that all remaining units of the fiat currency would be turned into Tether, a popular stable currency. Binance put out the following tweet further clarifying the situation:
Fellow Binancians, we regret to inform you that with immediate effect, we are unable to facilitate Pay ID AUD deposits for Binance users due to a decision made by our third-party payment service provider.
The spokesperson continued with:
As a result, AUD pairs have experienced less liquidity which has impacted their pricing. We will be delisting [the] remaining AUD pairs in line with the closure of fiat off-ramp services. We remain focused on securing additional fiat relationships to service our users.
At first glance, the situation appeared hopeful to the untrained eye. It seemed as if the company was just seeking to sell bitcoin at lower costs, thus giving traders something to be grateful for. However, things have certainly come with their fair share of problems.
For example, the platforms allegedly stopped accepting Australian dollar deposits with little notice. Also, several cryptocurrencies that were later exchanged for Australian dollars on the exchange came with heavy premiums, thus raising prices for traders across the board. Lastly, plans have been announced for the delisting of several trading pairs to the displeasure and surprise of investors.
Binance has said this isn’t going to be set in motion permanently, and the company is looking for a separate provider that could potentially reinstate the firm’s abilities to accept and trade in AUD.
Problems with the CFTC
At press time, the company is being sued by the Commodity Futures Trading Commission (CFTC). The agency alleges that Binance repeatedly violated the Commodity Exchange Act. CFTC chair Rostin Behnam claimed in a statement:
For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance.