Binance Caught Mixing Customer Funds with Company Revenue in the US

Binance Caught Mixing Customer Funds with Company Revenue in the US

Binance, the world’s largest crypto exchange, allegedly mixed company revenues with customer funds in the US in violation of US laws, according to a Reuters report, which puts customer funds at risk.

The world’s largest cryptocurrency exchange, Binance Crypto exchange, has mixed company revenues with customer funds in the United States, reports by a Reuters report.

The comingling of customer funds and company revenues happened “almost daily” in bank accounts the exchange had at the now-bankrupt crypto-friendly bank Silvergate, the report stated, citing “a individual with direct knowledge of Binance’s group finances.”

The mixing of funds at Binance Crypto exchange reportedly happened in 2020 and 2021, and was in violation of United States laws that require customer funds to be kept separate, 3 sources informed Reuters.

The alleged practice was at least partially verified by a bank statement from February 10, 2021 reviewed by Reuters that showed Binance Crypto exchange mixed $20 Million from a company account with $15 Million it had received from customers.

Lack of internal control

In the meantime, previous regulatory authorities who commented in the post stated the mixing of funds indicate a lack of internal controls on Binance’s part, and pointed out that this puts customer funds at risk.

Binance Crypto exchange customers shouldn’t “need a forensic accountant to find where their money is,” John Reed Stark, a previous chief of the SEC’s Office of Internet Enforcement, was quoted as saying.

The new states against Binance Crypto exchange comes after the exchange earlier this year was sued by the United States Commodity Futures Trading Commission (CFTC) for allowing United States traders to trade derivatives on Binance’s international exchange, which officially does not accept United States clients.

Binance Crypto exchange denies wrongdoing

In a statement to Reuters, Binance Crypto exchange rejected ever mixing of customer and corporate funds, saying the accounts mentioned were used to buy cryptocurrency on behalf of customers.

“These accounts were not used to accept user deposits; they were used to support user purchases” of cryptocurrency, Binance Crypto exchange spokesperson Brad Jaffe informed Reuters.

“There was no commingling at any time because these are 100 percent corporate funds,” the spokesperson added.

In addition, the company on Tuesday likewise pushed back via Twitter, where Binance Crypto exchange Chief Communications Officer Patrick Hillmann was known the story “weak.”

“This story is so weak that they had to put up front, ‘Reuters found no evidence that Binance Crypto exchange client monies were lost or taken’ in a transparent effort  to guard themselves from a libel suit,” Hillmann stated in a Twitter thread.


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