Binance, the world's largest cryptocurrency exchange by trading volume, has reportedly had covert access to a U.S.-based partner's bank account and moved more than $400 million from that account to a trading firm managed by its CEO, Changpeng Zhao, according to a Reuters report. The transfers occurred during the first three months of 2021, with money flowing from the Binance.US account at Silvergate Bank to Merit Peak Ltd., a trading company. The transfers started in late 2020, the report said.
The report cited banking records and company messages but noted that it couldn't determine whether the transferred funds belonged to U.S. customers or the reasons for the transactions. Additionally, executives at the U.S. firm were reportedly concerned about the moves because they were unaware of them. It is unclear why Binance had access to the partner's bank account or whether it had the right to move funds from that account without authorization.
A Binance spokesperson didn't immediately respond to queries from The Block seeking comment on the matter. However, in a statement to Reuters, Binance.US spokesperson Kimberly Soward said the outlet was reporting "outdated information," but didn't address questions about the transfers. Meanwhile, parent company Binance, as well as Zhao and Prime Trust, a custodian firm listed as holding customer funds for the U.S. exchange, did not respond to Reuters. Silvergate Bank, on the other hand, said it doesn't comment on individual customers.
The reported transfers raise concerns over the use of client funds by the cryptocurrency exchange, which is known for its high trading volumes and a range of services that allow users to buy, sell, and store digital assets. It also highlights the regulatory scrutiny that the exchange has faced in recent years, with several countries cracking down on the platform due to concerns over money laundering, fraud, and other criminal activities.
In conclusion, Binance's alleged secret access to a U.S.-based partner's bank account and transfer of over $400 million to a trading firm managed by its CEO is likely to raise significant concerns among investors and regulators. The lack of transparency around the use of the transferred funds and the fact that the U.S. partner was reportedly unaware of the transactions only add to these concerns. It remains to be seen how Binance will respond to these allegations and what impact they will have on the company's business practices and reputation going forward.
Author: Alisha Hussain
Publisher: Hamza Rajput
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