Binance, the largest cryptocurrency exchange by trading volume, mixed up customer funds with company revenue between 2020 and 2021, Reuters reported on Tuesday, citing “three sources familiar with the matter.” The act violates the US financial laws that require both funds to be separated, the outlet said.
‘Billions of Dollars’ Commingled?
One source that had direct knowledge of the crypto exchange’s group finances, told the news agency that Binance blended its earnings with its customer’s money, with the figure running into “billions of dollars.” The source further said that the violation occurred “almost daily” in accounts held by Binance at now-liquidated US lender Silvergate Bank.
Earlier, Reuters had reported in February that Binance had secret access to a bank account held by its United States arm, Binance.US, through which the CEO, Changpeng Zhao between January and March 2021 moved over $400 million to a trading firm called Merit Peak Limited.
For its latest investigation, Reuters noted that while it could not independently confirm the source’s figures, it obtained a bank record showing that Binance on February 10, 2021, mingled $20 million from a corporate account with $15 million from an account dedicated to receiving customers’ funds. Furthermore, Reuters said it could not find evidence that customer funds were lost as a result of the commingling.
Providing Binance's reaction to the allegations, Reuters said that the exchange's spokesperson denied its finding, saying that the accounts were not used to receive user deposits. Instead, the spokesperson told Reuters, the accounts were deployed to aid users’ purchases.
“There was no commingling at any time because these are 100% corporate funds,” the spokesperson said.
Binance Blasts Reuters Report
Meanwhile, reacting to the report, Patrick Hillmann, Binance’s Chief Communication Officer, on Twitter described the story as “weak,” noting that Reuters wrote “conspiracy theories” on what the exchange had previously clarified was false. Moreover, Hillmann said the news agency lacked “zero evidence other than a ‘a former insider.’”
“We’ve been very public about where the company had regulatory shortcomings in the past, there’s no reason for a respected news outlet like Reuters to continue making stuff up,” Hillmann wrote.
Reuters’ report comes less than two months after the US derivatives market regulator charged Binance with operating an illegal digital assets exchange in the country. Furthermore, the Commodity and Futures Trading Commission accused Zhao of running Binance via several entities and through “an intentionally opaque common enterprise.”
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