London-based credit card processing company Checkout.com has terminated its contract with the once major client cryptocurrency exchange Binance, which has significantly contributed to Checkout’s business growth. The decision came as regulators around the world increased their scrutiny on Binance, and Checkout cited concerns over regulatory action, joint investigations, anti-money laundering measures, sanctions, and compliance controls as reasons for contract termination. Here are the details…
Checkout partnership with Binance ends
Checkout.com’s CEO, Guillaume Pousaz, communicated the decision to Binance in a series of letters, resulting in the effective termination date of August 17. Checkout spokesperson Lewis Jones confirmed that the contract has expired. However, Binance expressed disagreement with the grounds for termination and was reportedly considering taking legal action. Binance’s spokesperson, Dewi Mustajab, argued that the termination will not affect the quality of their services.
Binance played a key role in the growth of Checkout.com by processing billions of dollars in crypto transactions through its payment processor. This collaboration has helped Checkout reach a valuation of $40 billion and has garnered significant financial support, including a $1 billion funding round the previous year. The sudden termination marks a significant setback for the exchange, which helped boost Checkout’s reputation by initially providing a reliable payment processing platform. The partnership between the two companies began in a mutually beneficial trajectory. In the early stages, Binance provided Checkout.com with much-needed trading volume, while Checkout facilitated Binance’s expansion into the payment processing space.
When did the difficulties begin?
At first the process went pretty smoothly. But collaboration ran into challenges when Binance rolled out Checkout.com’s platform without implementing 3D-Secure, a security feature designed to reduce the risk of money laundering. This decision made the platform vulnerable to fraudulent transactions, resulting in significant losses. Despite these initial problems, Binance remained Checkout’s largest customer, raising both companies’ growth prospects. However, as regulatory pressure on Binance increased and another major crypto client boom occurred, Checkout began to reassess its heavy reliance on the crypto industry.
As we reported as Kriptokoin.com, the company reportedly reduced its internal valuation to around $9 billion amid these challenges. For Binance, the end of the partnership marks another hurdle in the face of regulatory investigations and growing compliance concerns. As both companies forge their own paths forward, the crypto industry continues to grapple with the evolving regulatory landscape and consequences for its key players.
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