The Binance exchange has been in turmoil for the past few months. While we learned yesterday of an indictment by the Securities and Exchange Commission (SEC), a new report comes to question the management of the company. It is notably accused of not having sufficiently separated Binance US, its American subsidiary, from its parent company.
Binance Hit by New Accusations
As a reminder, there is a blur around the location of Binance – the global entity. The company has local subsidiaries, notably in the United States. Binance US is regulated by US laws and regulators, and it theoretically exists outside of the “classic” Binance platform.
It is this last point that is called into question in a new Reuters report, which claims that Binance and Binance US Reportedly Shared Bank Accounts. According to bank documents and private messages seen by the outlet, a high-ranking Binance executive allegedly managed five bank accounts belonging to Binance US, including one that held customer funds located in the United States.
The facts, which date back a few years, are aimed in particular at someone close to Changpeng Zhao:
“US lender Silvergate Bank cleared Binance executive Guangiyen Chen, a close associate of Binance CEO Changpeng Zhao, to manage the accounts in 2019 and 2020.»
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Mixed customer accounts and funds?
According to the Reuters report, Binance US employees had to ask Guangying Chen to process payments, including paying salaries. If this turns out to be true, this is problematic because Binance US is supposed to operate strictly autonomouslyand centered on US territory.
Asked by Reuters, the CEO of Binance US confirmed that “no one other than Binance US executives had control or access to Binance US accounts» since his arrival at the end of 2021. But that would not have been the case before, according to the report.
Moreover, this report echoes another, published two weeks ago. In it, Reuters cited unnamed sources who claimed that Binance mixed “Billions» of client funds with its own funds. The accusations against the cryptocurrency giant are therefore piling up, and the blow delivered by the SEC yesterday is undoubtedly not the last.
For his part, CEO Changpeng Zhao was not very vocal on Twitter, contenting himself with publishing a poll implying that Binance protected its users more than the SEC itself. The repeated accusations however, show that the tide has turned for Binance, which faces a particularly hostile context. What really make the world’s largest exchange platform wobble? The months to come will tell us.
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