Why Binance Is Under Controversy Once Again: What’s Happened

Why Binance Caught In Controversy Once Again: What’s the Story?

Binance, one of the world’s largest cryptocurrency exchanges, is under the spotlight for allegedly seizing cryptocurrency from Palestinian users. This has sparked controversy and raised concerns about the platform's actions and the impact on Palestinian crypto holders.

What’s the News

On August 26, Ray Youssef, co-founder of Paxful and CEO of Noones P2P platform, made a claim on X (formerly Twitter) that Binance had confiscated all funds from Palestinian accounts based on a request from the Israel Defense Forces (IDF). 

Youssef argued that the exchange's actions were broad and affected all Palestinians, leading to widespread condemnation. He also suggested that similar measures might soon extend to users in Lebanon and Syria.

Youssef’s report was based on a letter allegedly sent by Israel’s National Bureau for Counter Terror Financing, signed in November 2023. According to this letter, Israeli anti-terrorism laws permit the temporary seizure of assets from entities linked to terrorism, including cryptocurrencies. 

This letter reportedly led Binance to block Palestinian accounts, which Youssef claimed had been in response to appeals from affected users.

Why Binance Seized the Palestinian Crypto Assets

Binance has addressed these allegations, stating that the platform did not seize funds from all Palestinian users. 

Instead, Binance clarified that only a small number of accounts, specifically those linked to illicit activities, were restricted. 

The exchange emphasized that it complies with international sanctions and regulations, similar to other financial institutions.

According to Binance, the restrictions were applied to accounts connected to illegal activities, not all Palestinian accounts. 

A Binance spokesperson stated that the claims of widespread seizure were incorrect and that only a minor portion of accounts had been impacted. 

The company has not detailed the number of accounts affected or when the restrictions were applied.

What’s Next

The situation has drawn significant attention, especially given the relatively small market share Palestine represents for Binance Exchange. Data from SimilarWeb shows that Palestine accounts for about 0.05% of Binance’s web traffic, though there has been an 80% increase in traffic from Palestine since August 2023.

As the controversy continues, it remains unclear how Binance will address the situation further and whether additional measures will be taken against accounts in other regions. 

The broader implications for cryptocurrency exchanges and their handling of regulatory requests could also come under review. 

Recently, Binance CEO Richard Teng shared the plans for Major Expansion and regulatory compliance while hoping for a peaceful resolution to the ongoing regional conflicts.

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