As reported by Reuters, the cryptocurrency exchange Binance in 2020 and 2021 did not keep separate records of corporate and customer balances in violation of U.S. financial rules.
Reuters, citing unnamed sources close to the Binance exchange, reported that the cryptocurrency exchange systematically pooled company cash assets and customer deposits.
The news agency found documentary evidence of this statement – a bank record showing the movement of funds in an account opened by Silvergate Bank.
It turns out that on Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer deposits.
The Securities and Exchange Commission (SEC) has previously repeatedly pointed out that Binance, like other cryptocurrency exchanges, ignored U.S. financial rules and put customers’ assets at risk.
“Customers of cryptocurrency exchanges do not have to resort to forensic analysis to find out where and how much of their money may be.
The parties’ representations about their actual placement should always be crystal clear,” said John Reed Stark, former head of the SEC’s Office of Enforcement.
SEC Chairman Gary Gensler shares Stark’s view.
In his May address to the U.S. Congress, he said that many cryptocurrency exchanges offering services to U.S. customers are not complying with laws that require protecting customers’ money by separating it from corporate assets.
“Their business models tend to be built on attracting customer funds and commingling them,” he said.
Despite the SEC’s accusatory rhetoric, Reuters found no conclusive evidence that Binance customers’ money was lost or stolen as a result of the commingling.
Binance commented on the allegations against it, calling them untenable.
In a statement to Reuters, Binance not only denies the very fact of such mixing of customer deposits and company funds, but claims that such actions are fundamentally impossible.
“There has never been any commingling because these are 100% corporate funds.
These accounts were not used to accept customer deposits, but were used for the purpose of facilitating user purchases of crypto assets,” said Binance spokesman Brad Jaffe.
In mid-May, Binance Australia suspended operations with banks via PayID.
In addition, Westpac, the continent’s largest bank, banned its customers from placing deposits on the cryptocurrency exchange.