Binance is accused of transferring cryptocurrency to the accounts of the exchange’s chairman

The U.S. Securities and Exchange Commission (SEC) has announced that the international and U.S. divisions of the Binance crypto exchange transferred more than $ 12 billion in client assets to the accounts of funds controlled by the platform’s chairman Чанпен Чжао" href="https://noworries.media/biography/chanpen-chzhao/" data-bio-id="3681">Changpeng Zhao from 2019 to 2021.

The charges were based on the analysis of movements on the accounts of Binance, Binance. US, and Zhao himself in the American banks Silvergate and Signature. The SEC lawyers found that a significant portion of the assets was directed to Merit Peak accounts.

Merit Peak describes itself as «a closed trading firm that manages Changpeng Zhao’s own digital asset wealth». In total, more than $ 12 billion of the $ 22 billion that came to Merit Peak between 2019 and 2021 belonged to Binance and Binance. US customers, the SEC said. Another $ 11 billion of Binance’s client assets were held through the accounts of another organization called Key Vision Development Limited.

The vast majority of Merit Peak’s assets — $ 21.6 billion out of $ 22 billion — were then directed to the accounts of a foreign branch of Paxos, with which Binance collaborated on the project of its BUSD stablecoin. In February, the SEC initiated an investigation into Paxos, banning the company from issuing stablecoins.

Having fallen under the crosshairs of the regulator, Paxos severed all ties with Binance and is now doing its best to distance itself from its former partner. The agency also noted that Merit Peak itself traded on Binance. US, which raised a question for regulators: «Why was a firm operating its own funds acting as a 'pass-through account' for billions of dollars in customer funds flowing to Binance?»

Binance, the regulator argues, controlled Binance. US funds, although it made public statements that there was a separation between the companies. The scheme of Binance’s operation, as described by the SEC, has some parallels with the scheme of the FTX crypto exchange that went bankrupt last fall, whose client funds were used by Alameda Research, a company controlled personally by the platform’s chairman, Сем Бенкман-Фрід" href="https://noworries.media/biography/sem-benkman-frid/" data-bio-id="3697">Sam Bankman-Fried.

As a reminder, the U.S. Securities and Exchange Commission has filed 13 charges against Binance and Changpeng Zhao. The lawsuit alleges that Binance has been ignoring US securities laws, enriching itself by billions of dollars. Following Binance, the SEC filed a lawsuit against Coinbase with similar allegations. In both cases, members of the crypto community are outraged by the situation and point to inconsistencies in the SEC’s words.

«We are disappointed that the SEC has decided to file a lawsuit against Binance. From the very beginning, we have actively cooperated with the SEC’s investigations and worked diligently to answer their questions and help resol ve their concerns,» Binance said.