Following the collapse of FTX and Alameda Research last year, the United States government has been more attentive on top crypto exchanges including Coinbase Global, and Binance
Binance - [email protected] Centralised ExchangeCryptocurrenciesTrading AppCryptocurrency investment . Top financial regulatory agencies including the SEC and the CFTC have filed charges against several crypto-related firms to avoid a similar situation with FTX.
Notably, the SEC and the CFTC alleged that the SBF commingled client funds at his trading firm and used the funds to finance his quest for real estate, venture capital investments, and political donations.
Binance Accused of Mixing Customersโ Funds
In the latest developments, a report by media outlet Reuters suggests that Binance mixed customersโ funds with the companyโs revenues, in a similar manner FTX did before the collapse. According to the report, Binance mixed customersโ funds between 2020 and 2021 in breach of the SEC rules on handling customersโ funds. Reportedly, Binance mixed users funds and its revenues in billions of dollars mostly at the defunct crypto-related bank Silvergate Bank.
For instance, on February 10, 2021, bank records show that Binance mixed $20 million from a corporate account with $15 million from an account that received customer money.
The Denial
Nevertheless, Binance has vehemently denied the accusations claiming the accounts were meant to facilitate crypto purchases. In the companyโs defense, CEO has previously noted that the exchange often moves funds between accounts for accounting purposes.
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โThese accounts were not used to accept user deposits; they were used to facilitate user purchases of crypto,โ Binance spokesperson Brad Jaffe noted. โThere was no commingling at any time because these are 100% corporate funds.โ When users sent money to the account, he said, they were not depositing funds but buying the exchangeโs bespoke dollar-linked crypto-token, BUSD. This process was โexactly the same thing as buying a product from Amazon.โ