Binance Singapore Disallows Bitcoin Withdrawals to Privacy-oriented Wallets

Fintoism Binance Singapore Bitcoin Privacy

It would appear there is some hostility toward Binance Singapore lately. This version of the world’s leading crypto exchange doesn’t take kindly to privacy coins. In fact, it will even suspend accounts temporarily until a proper explanation is provided. 

Privacy Isn’t Allowed

For many crypto users, privacy is not an option but  a must. Unfortunately, it is not a feature found in any of the top cryptocurrencies today. Bitcoin, for example, lacks all privacy and anonymity features one can think of.

For users who want privacy, that creates a problem. They often have to resort to other solutions to add a layer of privacy to their bitcoin transfers. This can be done by using CoinJoin, mixers, or privacy wallets such as Wasabi Wallet and Samourai Wallet.

One problem arises in this regard. Many service providers automatically associate privacy with criminal activity. That is simply not how things work, yet users are at the mercy of these providers. Particularly where exchanges are concerned, relying on privacy features can be very problematic.

Binance Singapore has a Problem

A recent Twitter communication confirms how dire things can get. A bitcoin user was trying to withdraw funds from the exchange to a Wasabi Wallet address. The transaction was refused and the user’s account was put under strict limits.  Further withdrawals had been suspended automatically as well.

To resolve the matter, the user had to answer some questions. The Binance Singapore team wants to know why the funds are withdrawn to Wasabi Wallet, what kind of job the user has, and their income range. Very unusual questions when withdrawing money to a wallet address.

In the end, the user managed to get the account restored and the bitcoin funds out of the exchange.  The company made it clear they do not allow for transactions associated with several business models. Those include gambling, peer-to-peer trading, and mixer sites. A very harsh stance, but that is to be expected when dealing with centralized exchanges in 2019 and beyond.

A “Victim of the System”

All of this negative attention created a lot of backlash. Changpeng Zhao, owner of Binance, took to Twitter to clarify a few things. In his message, he claims Binance Singapore adheres to rules introduced by the MAS and Xfers. As such, they need to perform strict AML and CFT controls.

https://twitter.com/cz_binance/status/1207825158783696896

In the end, he claims his company is a victim of the regulatory system. That is, perhaps, an easy way out from under the negative attention. It is not an incorrect statement either. However, the community doesn’t take this answer lying down either.

Finding a solution to this problem is not easy. Using peer-to-peer trading platforms is one option to avoid centralized exchanges. In terms of liquidity, however, that may not always be a viable option.

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