Binance Exchange Allegedly Commingled Customer Funds and Company Revenue
Following the collapse of FTX and Alameda Research last year, the United States government has been more attentive on top crypto exchanges including Coinbase Global, and binance binance [email protected] Centralised Exchange . Top financial regulatory agencies including the SEC and the CFTC have filed charges against several crypto-related firms to avoid a similar situation with FTX.
Notably, the SEC and the CFTC alleged that the SBF commingled client funds at his trading firm and used the funds to finance his quest for real estate, venture capital investments, and political donations.
Binance Accused of Mixing Customers’ Funds
In the latest developments, a report by media outlet Reuters suggests that Binance mixed customers’ funds with the company’s revenues, in a similar manner FTX did before the collapse. According to the report, Binance mixed customers’ funds between 2020 and 2021 in breach of the SEC rules on handling customers’ funds. Reportedly, Binance mixed users funds and its revenues in billions of dollars mostly at the defunct crypto-related bank Silvergate Bank.
For instance, on February 10, 2021, bank records show that Binance mixed $20 million from a corporate account with $15 million from an account that received customer money.
The Denial
Nevertheless, Binance has vehemently denied the accusations claiming the accounts were meant to facilitate crypto purchases. In the company’s defense, CEO changpeng zhao changpeng zhao Changpeng Zhao is the Founder and Chief Executive Officer at Binance.His contribution to the enhancement of Binance made the platform world’s largest cryptocurrency exchange since its inception in 2017. Zhao launched the blockchain network Binance Smart Chain which has made a remarkable contribution to the development of the decentralized finance ecosystem. Whereas in 2019, he launched Binance’s US affiliate, Binance.US. He is commonly known as CZ, a Chinese-Canadian Business Executive who has been ranked 113th richest in the globe as of 2022. In the past, he founded Fusion Systems, a trading system for brokers famous for some of the fastest high-frequency trading systems for brokers. Zhao has served as a member of the team that developed Blockchain.info and played the role of Chief Technology Officer of OKCoin, a secure cryptocurrency exchange platform for Bitcoin, Ethereum, Dogecoin, and other crypto assets. EntrepreneurInvestorChief Executive Officer has previously noted that the exchange often moves funds between accounts for accounting purposes.
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“These accounts were not used to accept user deposits; they were used to facilitate user purchases of crypto,” Binance spokesperson Brad Jaffe noted. “There was no commingling at any time because these are 100% corporate funds.” When users sent money to the account, he said, they were not depositing funds but buying the exchange’s bespoke dollar-linked crypto-token, BUSD. This process was “exactly the same thing as buying a product from Amazon.”