- Deposited capital was used for trading and personal enrichment of the CEO
- Some of the money also served as collateral for BUSD
- The securities include two private equity firms, Merit Peak and Key Vision Development Limited
From 2019 to 2021, Binance and Binance.US diverted about $12 billion in deposited funds to front firms controlled by CZ. This follows new material filed by the SEC with the court.
The papers in question are part of a process to freeze the assets of Changpeng Zhao and the U.S. branch of the exchange. The regulator says customer funds on the platform “need to be protected.”</nbsp;
Securities and Exchange Commission (SEC) data show that top executives at the company used corporate accounts at Silvergate Capital and Signature Bank to move funds.</nbsp;
Assets were transferred to front company accounts in Lithuania, Kazakhstan and the Seychelles.. Most of them ended up at Merit Peak. It’s a private investment firm that appears to have made Zhao’s fortune, and at the expense of other people’s money.
A spokesman for the stock exchange denied the allegations.. Binance says these international transfers are part of its business practices.
According to other documents, Merit Peak also traded on Binance.US Platforms. At the same time, part of the money from the firm’s accounts was redirected to Paxos, the issuer of BUSD.
There is also another name on the papers – Key Vision Development Limited.. This firm was also involved in the scheme to redistribute funds, but its role is not yet fully understood.Recall, as part of an interview for Bloomberg, Gary Gensler said that he sees certain parallels between FTX and Binance. In particular, it is expressed in the organizational structure of companies. Allegedly they both used portfolio and front organizations to divert client funds.