On August 17, when Binance, the world’s largest cryptocurrency exchange, received an unexpected notification from payment processing giant Checkout.com about a premature contract termination, it marked a significant step in the continuum veering towards uncompromised regulatory compliance. Checkout’s reason for termination centered on regulatory concerns, but Binance viewed this as insubstantial, a stance implying potential legal action.
Binance’s spokesperson Dewi Mustajab presented a resilient front, asserting the strides the company has made towards a robust compliance program and an unwavering commitment to foster trust with regulators. Nevertheless, concerns over the exchange’s anti-money laundering, sanctions, and compliance controls were stated as key issues triggering Checkout’s abrupt decision.
Commencing its association with Binance in 2020, Checkout.com facilitated billions in crypto transactions for the exchange. Not only did the contract termination carry significant weight given the vast volume of business connected, but also, given it followed the closure of Binance Connect, the exchange’s business-centric crypto trading platform.
Here’s where it gets interesting. Their collaboration since March 2020 was strategic. Binance desired market credibility, while Checkout.com aimed to redefine its reputation away from adult content payments direction. The combine achieved both, generating substantial services and a high transaction volume. The collaboration even helped Checkout raise its valuation to a whopping $40 billion in a $1 billion funding round.
Yet, for this integration to dissolve accentuates a crucial point: regulatory scrutiny can spell the end of even the most lucrative partnerships. The termination sends an even more robust message to the crypto industry grappling with the implications of increasing regulations and escalating vigilance from regulatory bodies.
Binance, in response to the termination, claimed the move as a ‘strategic’ decision, though failed to detail Checkout.com’s involvement explicitly. It led to speculations about the envisioned ‘strategy,’ considering Binance Connect was shuttered the same day.
Binance’s distress compounded when another European payments provider, PaySafe, ended its collaboration in June. This convergence of contract termination by key associates escalates concerns about Binance’s future, especially amidst precarious legal battles with U.S. regulators, including the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The allegations range from supervising an ‘illegal’ exchange to a spurious compliance program and running an unregistered exchange—a grave indictment indeed.
The trajectory this case takes henceforth will be closely watched, as it will underscore the impact of non-compliant conduct in the crypto-sphere. How it wrestles with regulatory headwinds may set a precedent for the industry at large.
Source: Cryptonews
