Westpac Halts Transactions with Binance Amid Fraud Concerns
Westpac has restricted its customers from engaging in transactions with Binance, coinciding with the termination of Binance’s capability to accept PayID funds transfers from Australian clients, sparking controversy.
Binance is presently facing challenges in maintaining banking services in Australia amidst allegations from abroad regarding improper customer attraction and alleged facilitation of money laundering.
In a bid to guard against scams, Westpac has implemented various protective measures, preventing customers from sending Australian dollars to “high-risk” exchanges like Binance.
Chris Whittingham, General Manager of Risk and Fraud Operations at Westpac, explained, “We have identified that high-risk exchanges are the primary channels for scam funds. Digital exchanges play a legitimate role, but we have limited access to certain overseas exchanges that are frequently exploited for fraudulent activities.”
Whittingham referred to Westpac’s data, indicating that investment scams contribute to around half of all scam losses, with one-third of scam payments being directly transferred to cryptocurrency exchanges.
In addition to Westpac’s prohibition, Binance customers were informed on the same day that the exchange could no longer facilitate PayID deposits due to restrictions imposed by its third-party service provider, Cuscal.
Binance communicated in an email to customers, stating, “Deposits in Australian dollars through bank transfers are no longer available to Binance users in Australia due to a decision made by our third-party service provider. This suspension is effective immediately. Bank transfer withdrawals will also be affected, and we will inform users about the timeline once confirmed. We are working diligently to find an alternative provider to continue offering AUD deposits and withdrawals to our users.”
Cuscal refrained from directly commenting on the ban but emphasized its efforts in fraud detection.
“Cuscal will terminate any clients, customers, or merchants that fail to meet our stringent requirements,” stated a spokesperson in a released statement.
Westpac’s actions and Cuscal’s decisions follow the cancellation of Binance Australia’s derivatives license by the market regulator just a month ago. The Australian Securities and Investments Commission had been investigating Binance’s activities to assess whether the exchange violated its license by providing derivatives trading to retail investors.
During the investigation, Binance requested the regulator to cancel its financial services license, held by its subsidiary Oztures Trading.
Following the cancellation, Australian investors engaged in derivatives trading on the Binance platform were mandated to close their accounts and liquidate their positions.
Binance, along with its CEO Changpeng Zhao, is presently confronting a lawsuit filed by the US Commodity Futures Trading Commission. The accusations include operating an illegal exchange and implementing a deceptive compliance program.
The lawsuit claims that Binance “willfully evaded” US laws by actively seeking American customers for its derivatives business. Changpeng Zhao is a prominent figure in the cryptocurrency industry.
In November, his feud with disgraced FTX founder Sam Bankman-Fried intensified when Zhao raised concerns about the stability of FTX. This move triggered a sell-off in the company’s tokens, leading to the eventual collapse of FTX and resulting in criminal charges against Bankman-Fried. Subsequent to this incident, the cryptocurrency industry has come under heightened regulatory scrutiny.
“There is an undeniable need for regulation in this field,” remarked Westpac’s Chris Whittingham.
