Checkout.com, an FCA-regulated e-Money Institution (EMI) and credit card processing company terminated its contract with crypto exchange Binance due to mounting regulatory concerns and inquiries regarding Binance‘s operations, Forbes reported. This bold move comes although Binance significantly contributed to its growth and valuation. Checkout also raised questions about the crypto exchange’s compliance controls.
In a pair of letters sent to Binance on August 9 and 11, Checkout CEO Guillaume Pousaz cited regulatory actions, orders in relevant jurisdictions, and partner inquiries as reasons for ending the relationship. Pousaz expressed regret over discontinuing their services while extending well wishes for Binance‘s future endeavors.
Checkout spokesperson Lewis Jones confirmed the contract termination. However, Binance expressed disagreement with the grounds for ending the contract, hinting at potential legal action. “There is no impact on our services and users can continue to use on-and off-ramps as usual,” Binance spokesperson Dewi Mustajab said.
Earlier this week, Binance announced it was shutting down its own crypto payments service Binance Connect (previously known as Bifinity), which it launched in March 2022. The buy-and-sell service shut on Wednesday.
The severance between Checkout and Binance follows Binance‘s decision to discontinue Binance Connect, a crypto payment service, earlier in the week. This service was supported by Checkout, which had been processing between $300 million and $400 million in Binance transactions in recent months, according to a reliable source. The high Binance transaction volume has significantly contributed to the $40 billion valuation established for Checkout in January 2022 in a Series D finance round.
However, Checkout contested these transaction figures as “inflated and inaccurate.” Checkout‘s move to terminate its partnership with Binance is notable, considering its pivotal role in propelling Checkout to become one of Europe’s most valuable companies. Binance had been Checkout‘s largest customer, processing about $2 billion in transactions in a single month in 2021.
The collaboration had mutually benefited both companies. Binance, seeking to establish credibility in the financial market dominated by traditional institutions, found an ally in Checkout, which was trying to distance itself from processing payments for adult content and gambling sites. The partnership granted Binance access to a vital payments processor while providing Checkout with significant transaction volume.
As regulatory scrutiny on Binance intensified and FTX, another significant crypto client, experienced issues, Checkout reevaluated its high exposure to the crypto sector and adjusted its internal valuation.
