The world’s largest exchange, Binance, is in the news again. A new report from Reuters states that Binance allegedly mixed up customer funds and company revenue in 2020 and 2021, depositing them into accounts at Silvergate Bank. The group quickly responded, calling the allegations unfounded and conspiracy theories.
Binance allegedly merged customer funds in 2020 and 2021, finally, according to Reuters
According to the report of May 23 from Reuters, Binance allegedly shuffled billions of dollars of user funds in its accounts at Silvergate Bank, violating U.S. financial rules that require segregation of customer funds. The report cites an example from February 10, 2021, where $20 million from a corporate account was allegedly commingled with $15 million from a customer account.
Concurrently, Binance had several accounts at the Silvergate Bank. One of them, registered under the name of Binance Holdings was exclusively dedicated to the custody of corporate funds.
Another account, registered in the name of Key Vision Development and under the control of Changpeng Zhao the founder of Binance, was specifically used to receive deposits from non-US customers.
Finally, the third account, named Merit Peak and also controlled by CZ, was indeed where the funds were allegedly commingled. This delicate and troubling financial situation leaves no room for doubt
This practice of commingling funds would have put clients’ assets at risk, complicating the traceability of their assets, according to the report.
Binance maintains its innocence in this media blitz
During an interview, Brad Jaffe, Binance spokesman said to Reuters that the accounts held at Silvergate Bank were not intended to receive users’ deposits, but rather to facilitate their asset purchases.
For his part, Patrick Hillman, head of communications at Binance, responded to the report by calling it on Twitter “an article brimming with conspiracy theories.” He also pointed out that Binance keeps user and corporate funds on completely separate books.
So Binance continues to be the target of media attacks. Reuters is not new to this, as the media has also accused the exchange platform of being involved in terrorist financing. Finally, as if that wasn’t enough, Binance has also been accused of helping Russians circumvent U.S. sanctions. The CZ company continues to move forward with its head held high, as it always has.
Coming from a journalism university background, I came across Bitcoin and cryptocurrencies not long ago.
The potential of the Blockchain seduced me and I made it my research topic.