Binance Denies Reports of Mismanaging User Funds
- Reuters claims that three unnamed inside sources revealed that Binance used Silvergate Bank to commingle corporate funds and user deposits.
- Binance has faced increased scrutiny from US regulators since January.
- Reuters previously reported that Binance engaged in money laundering.
Crypto trading platform Binance has denied a Reuters report that the exchange mismanaged customer funds. According to the Reuters article, Binance broke US banking laws requiring the segregation of client funds. Reuters claimed that Binance failed to adhere to that policy and mixed corporate funds with clients’ funds in 2020 and 2021. The report alleged that such a mixture was a regular occurrence.
Reuters claimed that the fund’s mixture took place on accounts maintained at the now-defunct Silvergate Bank, with the total value reaching billions of dollars. The report further alleged that customer funds were sent to a Silvergate account operated by a Seychelles-based company owned by Binance CEO Changpeng Zhao.
Binance has denied the reports, maintaining that the exchange does not commingle customer deposits and corporate funds. Binance spokesperson Brad Jaffe said in a statement to Reuters, “These accounts were not used to accept user deposits; they were used to facilitate user purchases. There was no commingling at any time because these are 100% corporate funds.”
Binance’s chief communications officer, Patrick Hillman, also took to Twitter to deny today’s report. Hillman said Reuters was “desperate” to publish a negative story about Binance. He wrote that “this story is so weak that they had to put up a front; “Reuters found no evidence that Binance client monies were lost or taken” in a transparent attempt to protect themselves from a libel suit.”
Hillman dismissed the report as “conspiracy theories.” He noted that Binance has been “very public about where the company had regulatory shortcomings in the past,” adding that “there’s no reason for a respected news outlet like Reuters to continue making stuff up.”
The Binance chief communications officers also addressed the “xenophobia behind consistently mentioning CZ’s (Changpeng Zhao’s) ethnicity without noting that he’s been Canadian since the age of 12.”
This is not the first time that Reuters has published accusations against Binance. Previous allegations made against the exchange included claims of irregular money transfers and money laundering. Interestingly, Reuters acknowledged that it was unable to independently confirm the amounts or frequency of the transactions detailed in today’s report.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
