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YOUR WEEKLY TECH INSIGHT FROM ACROSS THE GLOBE

Friday June 09 2023

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Banks are cutting off Binance’s access to U.S. banking system, exchange says

Binance.US customers will no longer be able to use U.S. dollars to buy crypto on the platform as early as June 13, after both payment and banking partners “signaled their intent to pause USD fiat channels,” the exchange said.

‘Unjustified civil claims’

Binance announced the change late Thursday night on Twitter, and blamed the Securities and Exchange Commission’s “unjustified civil claims against our business.”

The exchange said it had preemptively disabled customers’ ability to buy and deposit U.S. dollars.

Customers won’t lose their money — those who haven’t withdrawn their money by the shutdown date could still theoretically convert it to a stablecoin such as tether, then withdraw that and convert it back to dollars elsewhere.

But it suggests that Binance’s banking partners have decided the exchange is too risky a client to keep on, and that the revelations from the SEC case have grown too significant to ignore.

Unclear which banks involved

The exchange’s disclosed U.S. banking partners, which have included Axos Bank, Cross River Bank, and the failed Silvergate, Signature, and Silicon Valley Banks, processed billions of dollars in transactions for the U.S. exchange, according to documents Binance provided to the SEC.

Multiple banking partners had already stopped serving Binance, and it wasn’t immediately clear which banking partners Binance retained.

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SEC sues Coinbase and Binance

The Securities and Exchange Commission sued crypto exchange Coinbase in New York federal court on Tuesday morning.

On Monday, the SEC filed 13 charges against Binance, the world’s largest crypto exchange, and its founder, Changpeng Zhao.

Coinbase’s commingling

The SEC alleges that Coinbase was acting as an unregistered broker and exchange and demanding that the company be “permanently restrained and enjoined” from continuing to do so.

“These trading platforms, they call themselves exchanges, are commingling a number of functions,” SEC chair Gary Gensler said on CNBC Tuesday. “We don’t see the New York Stock Exchange operating a hedge fund,” Gensler continued.

The SEC has alleged that at least 13 crypto assets available to Coinbase customers were considered “crypto asset securities” by the regulator. Those assets include Solana’s SOL token, Cardano’s token and Protocol Labs’ Filecoin token.

More serious charges against Binance

The SEC’s charges against Binance are more severe. It alleges Binance and Zhao comingled billions of dollars’ worth of user funds and sent them to a European company controlled by Zhao.

The complaint alleges that Binance created Binance.US as a shield for the main company and Zhao, to “reveal, retard, and resolve” law enforcement targets and insulate Binance.

On Tuesday evening, the SEC filed an emergency motion in Washington, D.C. federal court Tuesday evening, asking a judge to freeze the assets of Binance’s U.S. platform and repatriate both fiat currency and crypto held by the service’s customers.

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European startup funding to drop a further 39% this year as tech rout continues

Funding for Europe’s venture-backed startups is forecast to decline from $83 billion in 2022 to $51 billion in 2023, according to data from venture capital firm Atomico.

That was largely down to a retreat from U.S. investors. American funds have previously been a significant driver of funding activity in Europe, and several notable VC funds in the U.S. have set up shop in London to increase their investments in the region.

Brutal year

The further drop in funding in Europe follows a brutal year for the technology industry last year — investment for private tech startups in Europe declined 22% to $83 billion in 2022 from $106 billion in 2021, Atomico said.

Atomico said there were some signs of “resilience” in Europe’s tech industry, including the fact that the overall value of public and private companies regained the $3 trillion mark it attained in 2021.

Meanwhile, early-stage firms have seen their funding reduced by less than their later-stage counterparts, Atomico said.

Macroeconomic challenges

Technology firms have come under huge strain over the last year and a half, with companies being pushed to prioritize profitability over growth at all costs as investors reevaluate the sector.

Once richly valued technology companies have seen their shares come under pressure from global factors, including Russia’s full-scale invasion of Ukraine and tighter monetary policy.

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U.S.-China chip war could hurt South Korea’s tech giants — but not for long, Fitch says

China accounts for 40% of Samsung’s total flash memory chips (NAND) production capability. It also accounts for 40%-50% of SK Hynix’s dynamic random access memory (DRAM) chips and 20% of its NAND capacity.

But the U.S-China chip war should not cause “a major long-term supply disruption, as it is likely that Korea will become the main location for the two companies’ expansionary investment and technology upgrades,” Fitch Ratings said in a June 7 report.

Largest chip manufacturers globally

Samsung Electronics and SK Hynix are the two largest manufacturers of memory chips globally, followed by U.S.-based Micron.

The companies’ fabrication plants in China make advanced chips as well as older chips, which are exempted from the U.S. restrictions. The memory chips are produced for Chinese consumption as well as exports.

Benefiting from the chip wars?

The U.S. in October introduced sweeping rules to cut off China’s access to obtain or manufacture high-tech semiconductor chips. The Netherlands and Japan are reportedly poised to follow suit.

In what is seen as a retaliatory move, China banned the sale of products from Micron for use in critical information infrastructure in May.

Fitch Ratings said Samsung and SK Hynix “may benefit from higher chip prices within China as a result. However, the impact is likely to be small and could be offset if Micron redirects the sale of its memory chips outside of China, as this would probably lower global chip prices.”

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Three decades after inventing the web, Tim Berners-Lee has some ideas on how to fix it

The internet landscape is now disempowering for individuals, and its inventor Tim Berners-Lee and Inrupt CEO John Bruce share their visions for the future of the web.

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