Westpac Imposes Immediate Restriction On Payments To Binance Centralised Cryptocurrency Exchange

19 May 2023

Mitchell Nixon


Westpac has prohibited its customers from conducting transactions with Binance, coinciding with the removal of Binance’s ability to accept PayID funds transfers from Australian clients, a move that has stirred controversy.

Binance is currently battling to maintain banking services in Australia while confronting allegations from overseas regarding improper customer attraction and facilitation of money laundering.

In an effort to safeguard against scams, Westpac introduced 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, stated, “We have determined that high-risk exchanges are where scam funds are predominantly being funnelled into. Digital exchanges have a legitimate role, but we have restricted access to certain overseas exchanges that are frequently exploited for fraudulent activities.”

Whittingham referred to Westpac’s data, which revealed that investment scams account for approximately half of all scam losses, with one-third of scam payments being directly transferred to cryptocurrency exchanges.

Apart from Westpac’s ban, Binance customers were notified on the same day that the exchange could no longer facilitate PayID deposits due to limitations imposed by its third-party service provider, Cuscal.

Binance announced in an email to customers, “Deposits in Australian dollars through bank transfers are no longer available to Binance users in Australia as a result of 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 highlighted its own 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 licence 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 licence by providing derivatives trading to retail investors.

During the investigation, Binance requested the regulator to cancel its financial services licence, held by its subsidiary Oztures Trading.

As a result of the cancellation, Australian investors trading derivatives on the Binance platform were required to close their accounts and unwind their positions.

Binance and its CEO Changpeng Zhao are currently facing a lawsuit filed by the US Commodity Futures Trading Commission, accusing them of operating an illegal exchange and implementing a deceptive compliance program.

The lawsuit alleges that Binance “willfully evaded” US laws by soliciting American customers for its derivatives business. Changpeng Zhao is a prominent figure in the cryptocurrency industry.

In November, his rivalry with disgraced FTX founder Sam Bankman-Fried escalated when Zhao questioned the stability of FTX, leading to a sell-off in the company’s tokens. This chain of events eventually resulted in the collapse of FTX and criminal charges against Bankman-Fried. Since the collapse, the cryptocurrency industry has faced increased regulatory scrutiny.

“There is an undeniable necessity for regulation in this field,” commented Westpac’s Chris Whittingham.

It’s just a question of whether the Australian Government and any Big 4 Bank are doing this the right way, with the right intentions.