In a surprising decision, Mastercard has decided to resume its debit card program with Binance, the world’s largest and most embattled crypto exchange, despite numerous ongoing controversies and serious allegations. This move raises significant questions about the card giant’s risk assessment and decision-making processes. Trustpilot suspended the Binance TrustScore due to a fake review investigation. Consequently, PayRate42 downgraded Binance‘s Risk Rating to Red.
Since Binance‘s $4.3 billion settlement with U.S. authorities in November 2023, where the exchange was implicated in money laundering activities for cybercriminals and terrorist organizations, the company has faced escalating troubles. Two top Binance executives were arrested in Nigeria and charged with money laundering, tax evasion, and forex manipulation. Among them is Binance’s head of the Financial Crime Compliance (FCC) team, Tigran Gambaryan. Additionally,
Trustpilot has suspended Binance’s TrustScore rating amid allegations of fake reviews and rating fraud. The rating platform announced respective investigations. This prompted the cyber rating agency PayRate42 to downgrade Binance‘s risk rating to red. The compliance rating has already been on the rating agency’s red list.
Mastercard’s decision to restore its business relationship with Binance seems particularly incomprehensible given these developments. According to a report by CoinDesk, Binance is once again allowing Mastercard users to purchase cryptocurrencies on its platform. This comes after both Mastercard and Visa suspended their debit card programs with Binance in August 2023, coinciding with the exchange’s legal challenges in the U.S., including charges by the SEC and CFTC. Although Binance reached a billion-dollar settlement with the CFTC, the SEC’s complaint remains unresolved.
Even before Trustpilot suspended Binance’s TrustScore rating, the exchange had a dismal 1.5-star rating, indicating a scam status. Of the more than 4,400 reviews, 80% rated Binance with just one star. This poor rating aligns with the assessment of FinTelegram’s #BinanceWatchdog initiative, which has highlighted numerous complaints from Binance customers, including issues with fund freezes. These indicators clearly show that Binance faces compliance issues and struggles with providing satisfactory customer service.
While Mastercard has resumed allowing purchases, withdrawal services have not yet been reinstated. The ability to easily convert between fiat and cryptocurrencies is crucial for Binance’s retail business, as it is a service offered by most of its major competitors.
Mastercard has emphasized that its decision is contingent on continuous monitoring. A spokesperson told CoinDesk, “Over the past few months, we have reviewed the enhanced controls and processes that Binance has implemented. Based on these efforts, we have decided to allow Binance-related purchases on our network. This status is subject to ongoing reviews.”
However, given the serious accusations and ongoing investigations against Binance, Mastercard’s decision seems driven more by the ambition to dominate the crypto sector rather than sound risk management. Both Visa and Mastercard are increasingly focusing on cryptocurrencies, signaling their recognition of the potential of blockchain technology in the financial industry. Yet, this enthusiasm should not overshadow the necessity for rigorous compliance and customer protection standards.
In conclusion, while Mastercard’s renewed collaboration with Binance may reflect the payment network’s strategic interest in the burgeoning crypto market, it raises substantial concerns about the oversight and risk management practices being applied. The situation calls for a vigilant approach and continued scrutiny from regulatory bodies and industry watchdogs.
