Westpac, the oldest bank in Australia, has banned cryptocurrency transactions to certain exchanges as part of a trial to reduce scam losses. The bank said that investment scams constitute a significant proportion of scam losses, with one-third of all scam payments transferred to cryptocurrency exchanges.
The Australian Competition and Consumer Commission’s Scamwatch also reported that investment scams made up the largest portion of scams reported to various financial crime agencies.
Westpac’s decision to block transactions to crypto exchanges aims to protect customers from scams. The bank’s Customer Services and Technology Executive, Scott Collary, said that the trial of new security measures would target investment scams, which have a devastating impact on customers.
Collary stated that customers often find out they have been scammed after the money has left the country, making recovery extremely difficult. The ban on transactions to certain exchanges could potentially save customers millions of dollars.
Although Westpac did not explicitly name Binance, the exchange is believed to be impacted by the ban. Chris Whittingham, Westpac’s General Manager of Risk and Fraud Operations, told the Australian Financial Review that proceeds from scams are usually sent to “high-risk” overseas exchanges.
Binance’s Recent Troubles
Binance Australia had its derivatives trading license canceled last month, and the exchange is under investigation by the Australian Securities and Investments Commission (ASIC) for potentially violating its license by providing derivatives trading to retail Australian traders.
Moreover, Binance and its CEO Changpeng Zhao are facing a lawsuit in the U.S. by the Commodity Futures Trading Commission. The lawsuit filed in March alleges that Binance is operating an illegal exchange and violated market laws.
Binance Australia announced today that it can no longer process PayID Australian Dollar deposits after a third-party service provider, Cuscal, restricted access.
At the time, a Binance spokesperson called the lawsuit “unexpected and disappointing” and said that the exchange had been cooperating with regulators for two years.
CFTC Chairman’s Comments
Last month, CFTC Chairman Rostin Benham accused Binance of willfully and deliberately breaking market laws by soliciting and offering futures contracts and derivatives to U.S. customers.
Westpac’s ban on cryptocurrency transactions to certain exchanges is part of its ongoing efforts to protect customers from investment scams. Binance, which is believed to be impacted by the ban, is facing multiple legal and regulatory challenges, including the recent cancellation of its derivatives trading license in Australia and a lawsuit by the CFTC in the U.S.
As the cryptocurrency industry continues to grow, it is crucial that financial institutions and exchanges prioritize customer protection and security to prevent scams and fraud.