‘Large Amounts of Money’ Flowed in Binance Related Accounts: SEC Accountant Says

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Sarah Wynn

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June 25, 2023

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An accountant for the US Securities and Exchange Commission says crypto exchange Binance, CEO Changpeng Zhao and related entities moved “large amounts of money” from 2019 up to this year.

Binance and its entities held numerous accounts with the now failed Silvergate Bank and Signature Bank during that time, according to a court filing released on Wednesday. 

“The transactions in many of the Binance or Zhao-owned company accounts held at Silvergate Bank and Signature Bank show large amounts of money flowing in and out of the accounts,” the accountant said. “The large incoming credits are followed by outgoing debits within days, with the result that the accounts maintain a relatively much lower balance at month’s beginning and end.”

For example, one account with Silvergate had a beginning balance of $7.6 million and an ending balance of $7.7 million, but in February 2022, $20 million was deposited, and $17 million total was wired to other Binance entities, the accountant said. 

It is unclear why the money was moved, but financial institutions in the US are required to file suspicious activity reports. 

It could be a red flag when a bank customer moves around large amounts of money frequently between different accounts or instututions, said John Popeo, partner at The Gallatin Group, which advises investment firms, banks and technology companies.

“As a general matter, this activity would prompt further scrutiny by the bank to verify the nature of the activity,” Popeo said. 

A Binance spokesperson said the funds referenced are corporate funds, not user assets.

“Like every other company across the globe, our revenue is used to cover the operational costs of running our global business,” the spokesperson said. “We are globally regulated in 17 countries worldwide and regularly have to optimize corporate account holdings.” 

Binance’s showdown with the SEC

This comes just days after the SEC sued Binance and Zhao over their “blatant disregard of the federal securities laws.”

Binance and BAM Trading, doing business as Binance.US, under Zhao’s leadership, were unlawfully operating as an exchange, broker-dealer and a clearing agency without registering, the regulator alleged.

The SEC also said Solana, Cardano, Polygon among others were labeled as securities in the complaint.

The agency also filed an emergency motion on Tuesday night to freeze the assets of Binance.US.

“Because Defendants have repeatedly failed to provide sufficient assurances, the SEC now seeks the Court’s assistance in ensuring the safety and availability of investor assets and that Defendants do not dissipate assets that may become due should the SEC prevail in this action,” the SEC said in the motion. 

Updated at 11:20 a.m. ET to include insight from John Popeo

Updated at 3:21 to include response from Binance