In an unprecedented move against digital currency scams, Westpac, one of Australia's foremost banks, is imposing a ban on transfers to Binance, the largest global cryptocurrency exchange. The bank is taking this revolutionary step to help reduce the growing number of scam-related losses.
This crackdown by Westpac, a key player in the Australian banking scene, is part of an ongoing trial to restrict a series of cryptocurrency exchanges. It comes as the bank's latest data indicates that investment fraud constitutes almost half of all scam-related losses, with a staggering third of all scam payments routed directly to cryptocurrency exchanges. Binance, despite not being officially named by Westpac, is understood to be impacted significantly by this prohibition.
Scott Collary, Westpac's group executive of customer services and technology, emphasized that this proactive measure might save millions ordinarily lost to digital currency scams. Collary remarked, “Digital currency exchanges play a crucial role in today's financial ecosystem. But the surge in digital currencies has been accompanied by an increase in scammers exploiting overseas exchanges.”
Customers often fall prey to scams, only realizing their predicament after their funds have been transferred abroad, making any recovery near impossible. Westpac plans to roll out this crypto exchange ban in a phased manner over the upcoming weeks.
Reacting to this ban, Binance announced its inability to accept PayID payments in Australian dollars, a decision spurred by its third-party payment provider. This development followed the recent cancellation of Binance’s Australian financial services license to sell derivatives by the Australian Securities and Investments Commission (Asic), due to misclassification of retail customers as wholesale investors.
Binance, with its vast customer base of 128 million and daily trades amounting to $65bn, is undeniably a significant player in the cryptocurrency landscape. Hence, Binance's recent regulatory run-ins have sent ripples across the crypto world.
Earlier this year, the US commodity markets regulator brought a lawsuit against Binance and its CEO, Changpeng Zhao, alleging intentional evasion of US law. The lawsuit claimed Binance was aware of its platform being used for illegal activities and took advantage of loopholes to sidestep Know Your Customer rules.
Despite these legal issues, Binance aims to continue collaborating with regulators globally. Yet, given the surge in investment scams reported by the Australian Competition and Consumer Commission’s Scamwatch, with losses amounting to over $1.5bn, Westpac's stringent action against Binance underscores the critical need for regulatory balance in the volatile world of digital currencies.
As the crypto market evolves at a lightning-fast pace, it remains to be seen how effective this move by Westpac will be in tackling the mounting problem of crypto scams.
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