Regulators Uncover Binance’s Billions of Dollars Transactions Through U.S. Banks

Andrew Throuvalas
Last updated: | 2 min read
Source: Adobe / Artsaba Family

A new filing from the U.S. Securities and Exchange Commission suggests that Binance moved billions of dollars in customer funds through Signature Bank and Silvergate Bank – both crypto-friendly U.S. firms that failed in March. 

SEC accountant Sachin Verma said in the Wednesday filing that entities controlled by the exchange’s CEO – Changpeng Zhao (CZ) – held numerous accounts within both banks. One such entity was Merit Peak Limited, which the SEC alleged on Monday had “commingled” billions of dollars in client funds from both Binance and Binance US. 

“Between 2019 and 2021, Merit Peak accounts received $22 billion, including approximately $11 billion from Key Vision, $7.2 billion from other Binance entities, and $1.2 billion from BAM Trading [Binance US],” wrote Verma about the British Virgin Islands company’s Silvergate account. Most of that money – $21.6 billion – was paid to Paxos Trust Company, the issuer behind Binance’s BUSD stablecoin. 

The filing added that the Binance and Zhao owned accounts at both banks often at large incoming credits followed by outgoing debits “within days,” such that the accounts “maintain a relatively much lower balance at month’s beginning and end.”

The claims are reminiscent of a Reuters report last month claiming that Binance had mixed client funds with corporate funds between 2020 and 2021. 

Binance contested this representation by claiming that no “client funds” or “dollar deposits” were mixed, as any alleged mixing was only related to the conversion of USD into BUSD tokens within customers’ accounts. 

The accountant also tracked $494 million transferred to the Zhao-owned blockchain R&D firm “Sigma Chain” from Binance-related entities. 

The funds were eventually sent back out to a number of other Binance-connected entities, including $32 million to Guangying Chen – a Zhao associate and Chinese national with early ties to Binance. 

The filing also showed that Guanying was a listed signatory for numerous other Zhao-owned foreign companies, many of which had Binance in their name. 

One of those company accounts includes Bitfinity UAB (aka Binance UAB), which, through a web of Binance account transfers between 2020 and 2022, sent a Guanying-controlled company account $47 million. 

According to the New York Times, a Binance spokesperson has denied that the transactions reported in the filing involved any customer funds. 

However, Louise Shelley, a George Mason University professor and money laundering specialist, said Binance’s transfers were “one of the more sizable cases” of financial misconduct she has seen. “This is just so mammoth and should be raising red flags,” she said.