Binance, the world’s largest crypto exchange, is facing another big allegation – an allegation that Sam Bankman-Freid and FTX are also accused of: commingling customer and corporate funds in accounts at Silvergate Bank during 2020 and 2021. 😱
Reuters reports that Binance’s corporate funds were funneled into an account where users were purchasing $BUSD, Binance’s stablecoin. The commingling allegedly occurred in an account belonging to Merit Peak, a Cayman Islands-based entity controlled by Binance’s CEO, Changpeng Zhao (CZ).
Merit Peak was previously implicated in unusual transfers amounting to over $400 million from Binance US’s Silvergate account, which were later passed on to another entity controlled by CZ, Key Vision Development.
Binance has admitted to past instances of commingling with customer funds in different wallets, referring to these incidents as “historical operations oversights” which sounds like the financial equivalent of “special military operation.” 🤦♂️
It’s noteworthy that Binance’s claims of segregating client assets from Binance-owned assets may not reflect the actual structure on the blockchain. Instead, these are internal accounting entries within the Binance system.
This raises legitimate questions about the quality of their reporting, especially in light of previous issues such as the inadequate backing of BUSD.
Binance already has an ongoing lawsuit from the Commodities and Future Trading Commission (CFTC), which accuses Binance of allowing US individuals to trade on its platform and even against its users. 👨⚖️