Binance Mix User Funds With Company Funds

Binance crypto exchange. (Photo; Doc. CryptoWrecked)

JAKARTA The world's largest crypto trading company by its daily trading volume, Binance, is reported to have mixed user funds with its revenues in 2020 and 2021.

Launching Coingape, the mixing of funds occurs almost every day in an account held by a US crypto-friendly bank, Silvergate Bank. The amount of funds mixed reaches billions of dollars, as revealed by a source who directly knows the finances of the Binance group.

Reuters assessed that Binance failed to comply with US financial rules requiring the separation of customer money from the company's accounts. No internal control distinguishes customer funds from the company's revenue.

The news outlet did not verify the exact figures and frequencies. However, they reviewed the bank records originating from February 10, 2021, which showed Binance mixing 20 million US dollars (Rp290 billion) of company funds with 15 million US dollars (Rp223 billion) funds from accounts that received customer money.

John Reed Stark, former head of Office of Internet Enforcement at the Securities and Exchange Commission (SEC), said that "binance customers shouldn't need forensic accountants to find out where their money is."

Meanwhile, Binance spokesman Brad Jaffe denied the allegations. He stated that Binance did not mix customer deposits with the company's funds.

Binance uses a Silvergate Bank account to store the company's revenue. Meanwhile, consumer funds log in through Seychelles-based Key Vision Development, controlled by Binance CEO Changpeng Zhao. BUSD published by Paxos plays an important role in this transaction, but regulators stop it.

Binance is one of the crypto exchanges in the spotlight of US regulators, the Futures Commodity Trading Commission (CFTC). The regulator sued Binance and its founder Changpeng Zhao on charges of violating commodity law and illegally running derivative exchanges. Not only the CFTC, the Department of Justice (DOJ) is also reportedly investigating Binance regarding the issue of sanctions violation against Russia.

However, Coingape assessed that this situation was unclear and questioned whether Binance or Binance.US was in the spotlight of US regulators.