- Binance has been accused of violating U.S. financial regulations by combining customer funds with company revenue in 2020 and 2021.
- The money transfers revealed a lack of oversight at Binance, hiding the whereabouts of customer funds and endangering their safety.
According to a recent Reuters report, Binance, the biggest cryptocurrency exchange by volume, has been accused of violating U.S. financial regulations by combining customer funds with company revenue in 2020 and 2021. The report alleges that the exchange held mixed accounts at Silvergate Bank in the U.S. with amounts totaling millions of dollars, as stated by three sources familiar with the issue. This violates regulations that require the segregation of customer funds.
Although Reuters could not confirm the accuracy or frequency of the figures, the news agency examined a bank record that revealed Binance mixed $20 million from a corporate account with $15 million from an account that received customer funds on February 10, 2021.
According to the article, the money transfers revealed a lack of oversight at Binance, hiding the whereabouts of customer funds and endangering their safety. However, despite the accusations’ seriousness, no proof has been forwarded that Binance customers’ funds were misappropriated or lost.
This is not the first time Reuters has released incriminating articles about Binance. They have accused the company of engaging in questionable financial operations and participating in money laundering. Binance, as always, vehemently refutes these accusations.
On Tuesday, Binance’s Chief Communications Officer, Patrick Hillmann, expressed his opinion on the story through a lengthy tweet comprising five paragraphs, referring to it as lacking substance or strength.
This story is so weak that they had to put up front, ‘Reuters found no evidence that Binance client monies were lost or taken’ in a transparent attempt to protect themselves from a libel suit,
Hillmann added that, “Underneath that, they then pinned 1000 words of conspiracy theories (which we explained were false) with zero evidence other than a “former insider.”
Let me explain just how desperate a journalist @Reuters is to publish a negative story. The whole base of their story this morning, is that when users purchased BUSD (Paxos) from Binance, they were taken to a transaction page that had the term “deposit” on it. Users were making a…
— Patrick Hillmann (@PRHillmann) May 23, 2023
In addition, Hillmann criticized Reuters for what he perceived as “xenophobia” in referencing the ethnicity of Binance founder Changpeng Zhao without acknowledging that he became a Canadian citizen at 12. After the article was released, Hillmann took to Twitter and asserted that he had refuted Reuters’ allegations in his initial response. He clarified that the funds under discussion “were Binance’s corporate funds” from the sale of BUSD stablecoins.”
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US regulators’ accusations against Binance
In March, the US Commodity Futures Trading Commission (CFTC) made allegations against Binance, claiming that the company had permitted US-based trading firms to engage in cryptocurrency derivatives trading on its global exchange. The CFTC, in a lengthy 74-page complaint, asserted that certain entities associated with Binance had mixed funds.
Moreover, the regulatory body accused Binance’s CEO, Changpeng Zhao, of instructing employees and customers to bypass compliance controls to maximize profits. In its lawsuit, the CFTC also stated that Binance had granted certain prominent VIP clients advantages, such as expedited trade execution. In a blog, Cz said that the complaint filed by CFTC was “unexpected and disappointing.”
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