Binance.US Loses Money Transmitter License in North Dakota

North Dakota Revokes Binance.US’s License, Restricting Bitcoin Transactions.

Posted by: Jimmy Aki

Updated Jun 21st, 2024 2 minutes read

Key takeaways:

North Dakota's financial regulator has revoked Binance.US's money transmitter license.
The revocation restricts Binance.US from offering Bitcoin transactions to customers in North Dakota.
North Dakota is the seventh US state to revoke Binance.US's license.

Why the Money Transmitter License Was Revoked

Commissioner Lise Kruse of the North Dakota DFI stripped Binance.US (operated by BAM Trading Services) of its license on June 17, citing a violation of state money transmitter laws.

UPDATE: NORTH DAKOTA REVOKES BINANCE[DOT]US MONEY TRANSMITTER LICENSE AMID REGULATORY SCRUTINY
— BSCN Headlines (@BSCNheadlines) June 19, 2024

The revocation notice cited two reasons for this action. Firstly, Binance.US failed to maintain an effective anti-money laundering program.

Secondly, the exchange and its founder, Changpeng Zhao (CZ), were involved in money laundering violations and conspiracy to conduct unlicensed money-transmitting business in the US.

Excerpt of DFI’s notice to Binance.US

These violations were investigated by the US Department of Justice (DoJ) and other financial watchdogs, resulting in a federal conviction in November 2023. This led Binance founder Zhao to be forced to step down from his position as CEO following a plea deal with the US DoJ.

The revocation notice from North Dakota reads,

“The Commissioner has found that BAM Trading Services, Inc. has failed to comply with North Dakota laws.

Additionally, the majority beneficial owner and control person, Changpeng Zhao, has pled guilty to felony charges for violating the U.S. anti-money laundering laws.”

However, Binance.US can reverse the order by requesting a review within 30 days. The deadline to do this is July 17, 2024. If no request is made, the order will become effective.

How Does This Impact Binance.US Reputation?

North Dakota's revocation of Binance.US's money transmitter license deals a blow to Binance.US's reputation and overall business in the US. In March, a temporary restraining order caused a $1 billion outflow from Binance.US. This led to a 75% revenue loss. As a result, two-thirds of the staff were laid off.

This is the latest in a series of license revocations. Florida's Office of Financial Regulation issued an emergency suspension order against Binance.US's license on November 29, 2023. This came just eight days after CZ's guilty plea.

Subsequently, the Alaska Division of Banking and Securities rejected the renewal of Binance.US's license on January 8, 2024, citing the exchange's 100% ownership of its US subsidiary as the primary reason.

Shortly thereafter, North Carolina suspended the Binance.US license, followed by Maine declining to renew the license, thereby further complicating the exchange's business in the US.

Other states that have kicked Binance.US out are Connecticut and Oregon.

The U.S. state of Oregon has suspended the operating license of Binance US, as reported by Cointelegraph. This announcement was made on April 30 (local time), resulting in Binance US prohibiting remittances, holding, and selling of cryptocurrency for users in Oregon. Oregon now…
— BitcoinWorld Media (@ItsBitcoinWorld) May 2, 2024

North Dakota has become the seventh US state to revoke the money transmitter license of Binance.US, joining a growing list of states that have taken similar action against the cryptocurrency exchange.

Jimmy Aki

Drawing from his background in economics, Jimmy has monitored blockchain development for years, firmly believing in its power to democratise finance. Beyond offering commentary on the latest crypto developments, he also spends his time analysing open-source codes of promising projects on GitHub. Jimmy holds Bitcoin and Ethereum.