On August 17, Binance, recognized as the world’s largest cryptocurrency exchange, received a notice from payment processor Checkout.com, indicating the termination of their contract due to concerns surrounding regulations.
Yet, as detailed in a report by Forbes, Binance expressed dissent over Checkout.com’s grounds for ending the agreement and hinted at the potential pursuit of legal action.
Dewi Mustajab, Binance’s spokesperson, remarked, “We have made significant strides in developing a top-tier compliance program and aim to enhance trust with both regulators and partners.” Mustajab additionally emphasized that the contract’s termination by Checkout would not disrupt the services provided by Binance.
Checkout.com, headquartered in London, which had facilitated billions in cryptocurrency transactions for Binance clients, formally terminated its contract with the cryptocurrency powerhouse. This communication was conveyed through letters dispatched to Binance on both August 9 and 11.
The initial letter cited “reports of regulatory actions and mandates in relevant jurisdictions” as well as “inquiries from partners” as reasons for the termination.
Following this, another letter, sent two days after the initial one, raised concerns about Binance’s anti-money laundering practices, sanctions adherence, and compliance controls. This subsequent letter set the termination date as August 17, 2023.
The separation between Checkout.com and Binance occurred shortly after the closure of Binance Connect, the exchange’s business-oriented cryptocurrency trading division. Checkout.com had been supporting this service since its inception in March 2022.
Originally, Checkout.com and PaySafe partnered with Binance to contribute to the launch of Bifinity (later renamed Binance Connect). This fiat-to-crypto payments platform aimed to connect businesses, merchants, and users with the world of cryptocurrencies. It enabled merchants to accept cryptocurrency payments and provided users with access to buying and selling cryptocurrency services.
Binance officially shuttered the Binance Connect platform on August 16, the same day it became aware of the partnership’s dissolution with Checkout.com.
However, Binance’s closure of Binance Connect did not explicitly mention Checkout.com. Instead, the exchange cited “strategic reasons” as the basis for its decision, refraining from providing further specifics.
A spokesperson from Binance conveyed, “We regularly evaluate our products and services to ensure our resources remain dedicated to core initiatives that align with our long-term strategy. We consistently adapt and adjust our business approach based on evolving market and user demands.”
Collaborative Influence: The Crypto Market Odyssey of Binance and Checkout.com
A Tale of Collaboration: Binance and Checkout.com’s Crypto Market Evolution
In March 2020, Binance embarked on a journey to establish its credibility within the crypto market, while Checkout.com aimed to reshape its reputation from adult content payments. Their partnership proved transformative, yielding mutual benefits in vital services and surging transaction volumes.
Recent times have witnessed Checkout.com processing substantial Binance transactions, amounting to $300 million to $400 million. However, Checkout.com now finds itself among the ranks of payment providers severing ties with the cryptocurrency behemoth, a response to the ongoing global investigations. The European payment provider, PaySafe, similarly terminated its partnership with Binance in June.
Binance’s withdrawal marks a notable setback, given its pivotal role in propelling London’s payment processing firm to a significant European presence.
In 2021, Binance facilitated a staggering $2 billion in monthly transactions for Checkout.com, leading to an upswing in revenue and contributing to a momentous $1 billion funding round. This funding round elevated the company’s valuation to $40 billion.
Presently, Binance confronts a legal battle with U.S. regulatory authorities. In March, the Commodity Futures Trading Commission (CFTC) initiated legal action against Binance, its CEO Zhao, and former Chief Compliance Officer Samuel Lim. The allegations centered on violations of the Commodity Exchange Act and pertinent federal regulations. They were accused of overseeing an “illegal” exchange and implementing a misleading compliance program.
Subsequently, in June, the Securities and Exchange Commission (SEC) followed suit by filing a lawsuit against Binance and its CEO. The lawsuit cited their flagrant disregard for federal securities laws and encompassed 13 charges, including the operation of an unregistered exchange.