According to a report by Reuters, a high-ranking executive at Binance, who is closely associated with CEO Changpeng Zhao (CZ), allegedly managed and controlled five bank accounts that were linked to the independent United States arm of the cryptocurrency exchange.
The executive’s involvement in the financial affairs of the US arm raises concerns about potential conflicts of interest and lack of separation between the operations of Binance and its American division.
In a recent report by Reuters, it was revealed that a senior executive at Binance, the prominent cryptocurrency exchange, had been covertly managing five bank accounts associated with Binance’s independent United States affiliate, known as Binance.US. Shockingly, one of these bank accounts was found to be holding funds belonging to American customers, as evidenced by the bank records obtained by Reuters.
This discovery raises serious concerns regarding the transparency and compliance practices of Binance, highlighting potential breaches of regulations and the security of customer assets within the U.S. division of the exchange.
According to records from 2019 and 2020, Guangying Chen, a close associate of Changpeng Zhao, was granted control over the accounts by the now defunct Silvergate bank. This startling revelation adds another layer of complexity to the ongoing investigations faced by both Binance and its United States affiliate. The exchanges are currently under scrutiny in the United States for a range of alleged crimes, including facilitating money laundering and engaging in tax offenses.
The involvement of a trusted associate in the management of accounts raises serious questions about the operational practices and compliance standards of Binance and its US affiliate during the specified period. As regulatory authorities delve deeper into these allegations, the focus on ensuring accountability and transparency within the cryptocurrency industry intensifies.
Binance claims its US arm is completely independent
Despite Binance’s assertions of operational independence between its U.S. arm and the parent company, evidence suggests a more intertwined relationship. Binance has maintained that only Binance.US employees have access to Binance.US bank accounts, emphasizing the separation between the two entities. However, a review of messages by Reuters tells a different story, unveiling a significant level of reliance on Chen’s team. Binance.US employees were required to seek assistance from Chen’s team to facilitate various payments, including essential functions such as employee payroll.
This revelation raises concerns about the actual degree of independence and autonomy enjoyed by Binance.US, casting doubt on the extent to which the U.S. affiliate operates as a separate entity. As regulatory investigations into Binance and its U.S. arm continue, the credibility and transparency of the exchanges’ operational claims come under increasing scrutiny.
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According to the report, additional details emerge regarding Chen’s involvement in the operation of Binance’s U.S. arm. It is disclosed that Chen, in his capacity as the “Primary Admin User,” entered into agreements with Silvergate, granting him control over the five bank accounts associated with the U.S. affiliate. Notably, one of these accounts belonged to corporate clients, which subsequently transferred funds to Merit Peak, a trading firm under Zhao’s control. Disturbingly, it is alleged that Merit Peak mingled customer funds with its own corporate revenue.
This revelation raises serious concerns about the handling and potential commingling of customer funds, highlighting potential risks associated with the practices within Binance’s ecosystem. As regulatory investigations continue to unfold, these findings shed light on potential violations and call for further scrutiny to ensure the protection of customer assets and the overall integrity of the financial system.
Revelations from previously undisclosed bank records and messages bring to light the extent of Binance’s management control over the financial affairs of its U.S. business. These records illustrate the existence of secret access and outline the mechanisms through which this access was granted across Binance’s bank accounts at Silvergate.
However, Krishna Juvvadi, the head of the legal department at Binance’s U.S. arm, vehemently denied these claims, asserting that the exchange has maintained exclusive control over its operations since its inception in 2019. The conflicting statements between the reported evidence and Juvvadi’s denial raise questions regarding the level of transparency and oversight within Binance’s organizational structure.
These discrepancies further fuel ongoing scrutiny and regulatory concerns surrounding the exchange’s activities, necessitating a comprehensive investigation into its financial practices and the veracity of its claims.
Crypto exchange giant continues to dismiss all claims
Binance, the leading cryptocurrency exchange globally in terms of trading volume, finds itself entangled in a web of legal challenges within the United States. Notably, the exchange is currently under investigation by prominent regulatory bodies, including the Securities and Exchange Commission (SEC), Internal Revenue Service (IRS), and the Department of Justice (DOJ).
Despite these ongoing investigations, Binance staunchly maintains its innocence, vehemently denying any wrongdoing or violations of the law. In response to Reuters’ investigative report on the matter, the exchange dismisses the findings as merely spreading Fear, Uncertainty, and Doubt (FUD) against the company.
The contentious situation underscores the growing legal scrutiny surrounding Binance’s operations in the United States and the necessity for a thorough examination of its compliance with regulatory standards. The outcome of these investigations will undoubtedly shape the future trajectory of Binance and its standing within the global crypto ecosystem.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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