Binance CEO CZ Received $250 Million Loan, According to Court Documents
Court documents that were unsealed this week reveal that Binance CEO Changpeng ‘CZ’ Zhao received a $250 million loan from BAM Management U.S. Holdings, which he then transferred to BAM Trading. This revelation comes just one day after the SEC filed a lawsuit against Binance. In response to the SEC’s questions about specific financial maneuvers, the Binance US legal team filed documents stating that $183 million was transferred from Paxos Trust Company to BAM Trading in January. Paxos Trust had previously partnered with Binance in 2019 to launch Binance USD (BUSD), but stopped minting BUSD in February after receiving a Wells Notice from the SEC.
Interconnected Operations of Binance US and BAM Trading
BAM Trading and BAM Management both operate Binance US, a cryptocurrency platform that operates separately from the main Binance exchange. According to the court documents, BAM Management issued a $250 million convertible note to CZ in December, which he funded with BUSD. $183 million of this amount was sent to Paxos Trust to convert into USD, and then transferred to BAM Trading in January 2023. Regulators have been scrutinizing Binance US for some time, with the SEC claiming that the company has not cooperated with its investigation.
SEC’s Allegations and Concerns About Ceffu
In June, the SEC filed a lawsuit against Binance and its CEO, accusing them of violating federal securities laws and enriching themselves at the expense of investors. The SEC is particularly interested in Ceffu, an institutional crypto custodian and partner of Binance, which it believes has been used as a conduit between Binance US and Binance Holdings to move funds out of the US. CZ denied these claims on Twitter, stating that Binance US has never used Ceffu or Binance Custody. However, other unsealed SEC documents contradict this statement, indicating that Binance US did license custody software and support services from Ceffu.
Mysterious Money Movements and Previous SEC Investigation
There have been reports of mysterious money movements involving Binance US in the past. In February, it was revealed that the exchange had transferred $400 million to Merit Peak Ltd., a trading firm managed by CZ. The SEC had already announced an investigation into Binance last year. These recent court documents shed further light on the financial activities of Binance and its CEO, as the legal battle between the exchange and the SEC continues.
Hot Take: Binance’s Legal Troubles Continue
The unsealed court documents provide more insight into the financial dealings of Binance CEO CZ and his connection to BAM Trading. The transfer of funds between different entities raises questions about the transparency and independence of Binance US. Additionally, the contradictory statements regarding the use of Ceffu by Binance US further complicate the situation. As the SEC’s investigation progresses and more details emerge, it remains to be seen how this will impact Binance’s operations and reputation in the crypto industry.
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