Binance Secretly Transferred $400M to Zhao-Run Trading Firm

UTC by Bhushan Akolkar · 2 min read
Binance Secretly Transferred $400M to Zhao-Run Trading Firm
Photo: Web Summit / Flickr

Reuters cited the trail of a money transfer between the Binance.US account at Silvergate Bank to trading firm Merit Peak Ltd.

Crypto exchange Binance has been in the midst of controversies over the last few weeks and here’s one more. On Thursday, February 16, a Reuters report notes that Binance had secret access to the bank account of its US-based partner and had reportedly transferred $400 million from that account to a trading firm managed by Changpeng Zhao.

Explaining the trail of money transfers, Reuters noted that it moved from the Binance.US account at Silvergate Bank to trading firm Merit Peak Ltd. Also, all these fund transfers happened during the first three months of 2021. Citing all the bank records and company messages, Reuters said that the fund transfer had actually started in late 2020.

The publication noted that it couldn’t determine whether the transferred funds belonged to the US customers. Also, it noted that they had no idea of the reasons behind moving these funds. But Reuters added that executives at Binance.US expressed concerns regarding the transfers since they didn’t know why they were taking place.

Responding to the Reuters report, Binance.US spokesperson Kimberly Soward said the publication was reporting “outdated information”. However, he didn’t address any questions regarding the transfers.

Binance and SEC Settlements

Recently, the US Securities and Exchange Commission (SEC) has extended its oversight on the crypto exchange Binance. Earlier this week, reports emerged that the SEC could see BUSD issuer Paxos over the sale of BUSD as unregistered securities.

One of the top executives said that Binance might be willing to pay penalties to settle probes into its business in the US Binance chief strategy officer Patrick Hillmann has recently admitted that the company’s executives were unfamiliar with rules and laws involving bribery, corruption, and money laundering.

Binance is “working with regulators to figure out what are the remediations we have to go through now to make amends for that,” he said.

The US Department of Justice (DoJ) has been investigating Binance for a long time now since 2018 over lapses in compliance with US sanctions and anti-money laundering rules.

Now, Binance is finding itself in another major allegation on the crypto firm. However, they have denied the Reuters allegations outrightly.

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