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Binance Loses More Footing In Europe — Checkout.com Terminates Contract In London

Last Updated August 21, 2023 2:40 PM
Omar Elorfaly
Last Updated August 21, 2023 2:40 PM

Key Takeaways

  • Checkout.com terminates contract with Binance citing anti-money laundering issues
  • Binance is considering filing a lawsuit, saying Checkout.com’s claims are “inflated and inaccurate.”
  • The exchange shows signs of entire departure from Europe

Checkout CEO Guillaume Pousaz terminated  the company’s relationship with Binance in a pair of letters sent to the exchange on August 9 and 11.

Pousaz’s announcement cited “reports of regulators’ actions and orders in relevant jurisdictions” and “inquiries from partners,” signaling plans to end business ties with its largest-scale customer.

Checkout personnel confirmed to Forbes  the company’s commitment to ending the contract, a notion Binance plans to potentially address legally.

Binance did not immediately respond to a request for comment.

Binance’s European Money Laundering Troubles

The world’s largest exchange by trading volumes is on a series of unfortunate events in the European market. Earlier this year, Binance left markets in the UK, Germany, Netherlands and Cyprus.

As part of the EU’s new regulatory framework, policymakers are working on creating clear and strict regulatory guidelines aiming to protect consumers while promoting development in the digital asset field.

Binance is also under investigation in several European markets, including France. 

Binance is now facing severed ties with Checkout which processed between $300M and $400M for the exchange, in the UK. The contract announcement comes as a shock as the deal figures are huge.

On the one hand, Checkout processed $2B in trades for Binance in one month in 2021, a move that resulted in Checkout securing $1B in funding, raising the company’s valuation to $40B and making its CEO one of the richest men in Europe.

On the other hand, Checkout is actively working on improving its reputation, steering away from an image created by processing payments for porn and gambling sites.

Trouble between the two companies started when Checkout.com’s platform was launched in the first half of 2020 without implementing 3D-Secure, a security feature designed to mitigate the risk of money laundering.

Visa Alerted Checkout on Transactions

The security risk prompted Visa to raise a red flag to Checkout, highlighting a stream of fraudulent transactions on the exchange.

According to Forbes’ sources , an European organized crime syndicate took advantage of the security gap to trade over $10M in suspicious transfers. 

Checkout spokesperson Lewis Jones told  Forbes that in 2020 “3D-Secure was not a requirement in any country globally. Hence a request to route payment without 3D authentications was certainly not uncommon. To this day, it is only a legal requirement in Europe under SCA rules.”

However, the incident didn’t deter Checkout from carrying out further business with Binance. The payments company helped Binance boost its transfer volumes to more than $2B a month.

At the time, Binance became Checkout’s biggest institutional customer , prompting Pousaz to tweet  “95% of all transactions are going to be crypto in 10 years!” in a quote tweet that showed Binance CEO Changpeng Zhao, former FTX CEO Sam Bankman-Fried in a discussion panel.

The fall of FTX caused a shift in Checkout’s mentality as the collapsed crypto exchange was once one of Checkout’s biggest clients.

FTX collapse caused Checkout.com to experience a sharp drop in valuation, bringing the company’s value from $40B to $11 B in December of 2022 and again to $9 B in June 2023.

In a letter shared with Forbes, Pousaz told Binance he was “sorry that we are unable to continue offering our services,” adding, “we wish you the best of luck with your business moving forward.”

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