According to bank records, a top Binance official operated five bank accounts for the big cryptocurrency exchange’s ostensibly independent U.S. branch, including an account that kept American customers’ assets.
In 2019 and 2020, Silvergate Bank let Binance CEO Changpeng Zhao’s close associate Guangying Chen administer the accounts. This allowed Chen and her deputies to shift bank account funds. However, According to corporate messaging, Binance.US employees had to ask Chen’s team to accept payments, even for payroll.
Despite Binance’s claims of independence, the latest findings show how it tightly controlled Binance. The U.S. The previously unreported bank records and messages demonstrate that Binance managed the U.S. business’s finances across Silvergate bank accounts and how this covert access was obtained.
The U.S. denies Binance operated its bank accounts. However, Krishna Juvvadi, Binance’s head of law, told Reuters in April that staff. Since its creation in 2019, U.S. operator BAM Trading had “exclusive control.”
“No one other than Binance,” a Binance.US official, Christian Hertenstein, claimed in response to this article’s questions. U.S. officials controlled Binance. American accounts.” Hertenstein did not explain the gap between his and Juvvadi’s periods.
Binance and Silvergate, which crashed in March and is closing down, did not answer calls for comment.
In Washington, Binance’s U.S. operations are under scrutiny. However, by discreetly controlling Binance.US’s funds, Zhao guided the company’s growth in the world’s largest crypto market while keeping it separate from his worldwide exchange under U.S. regulator inspection.
IN MARCH, the U.S. Commodity Futures Trading Commission charged Binance and Zhao with deliberate evasion of commodities rules by “intentionally structuring entities” to circumvent investor protections. “Incomplete recitation of facts,” Zhao said of the civil charges. No comment from the CFTC.
According to Reuters, Chen’s assistant accessed one Binance.US Silvergate account that sent over $400 million to Zhao’s trading firm in 2021. As a result, As a result, Binance.According to the U.S., merit Peak, a trading firm, withdrew funds from its exchange trading. Binance.US deemed Reuters’ prior findings “simply not true,” according to Juvvadi.
On May 23, Reuters reported that Binance commingled its clients’ assets with its corporate income in Merit Peak’s Silvergate account, violating U.S. financial standards that require client money to be kept separate. In addition, users that contributed money to the account were buying Binance’s dollar-linked cryptocurrency, not deposits, according to Binance.
‘PRIMARY ADMIN USER’
Under CEO Catherine Coley, BAM Trading launched Binance.US in mid-2019. BAM Trading was held by Zhao through offshore firms, according to business filings. However, Binance.US claimed to be Binance’s “U.S. partner.” Zhao formed Binance.US as a de facto subsidiary to deflect U.S. regulators from the global exchange, Reuters reported last year.
In December 2019, a Binance.US employee told Coley that Silvergate wanted her to sign a banking resolution. This document specifies a firm’s banking connection to “make sure it is ok” for Chen to manage Binance’s bank accounts. A Silvergate relationship manager’s resolution document, acquired by Reuters, requested that Coley enable Chen to “open accounts, transact, and otherwise operate” BAM Trading accounts. Coley signed the agreement, according to a source.
2021 saw Coley leave Binance. U.S. Her lawyer, James McDonald, didn’t comment.
According to bank records from December 2019 and January 2020, Chen signed additional agreements with Silvergate to act as the “Primary Admin User” for five bank accounts: a customer deposit account, a corporate client account that later sent funds to Merit Peak, and three others. According to the agreements, the authorized individual could withdraw or deposit monies and nominate others to do so.
Later that year, Coley informed colleagues that she and her finance team were just view-access administrators for BAM’s accounts. It left Binance.US chief doesn’t oversee corporate money. “We cannot change anything” in the Silvergate banking portal, she stated.
“Since at least 2021, the only ‘Primary Admins’ on active Binance.US accounts have been Binance,” Hertenstein told Reuters. American officials.” He called several of Chen’s accounts “institutional client accounts” without specifying their activity.
Susan Li, a Binance executive, managed the accounts’ transactions, including Binance payments, after Chen was authorized.US payroll, firm emails show. I told a Binance.US employee, “Approved from my end.”
According to the chats, Chen, known as Heina, controlled the accounts until early 2021. She signed Silvergate documents using a Shanghai address. The Binance.In May 2020, a U.S. employee told colleagues Silvergate “was still waiting for Heina to sign the final paperwork” on a new bank account for Binance.US’s institutional customers.
Chen or Li may have moved monies from the Binance.US customer deposit account, but Reuters could not confirm. Chen and Li didn’t answer Reuters’ questions. “Customer funds have not been misused or co-mingled,” claimed Binance.US’s Hertenstein.
In 2020, Coley and her team constantly asked Li for Binance control.US bank accounts, with firm letters expressing concern over authorities’ reactions. “I think it makes sense BAM has its login for the regulatory perspective,” said the Binance.US finance director wrote to Li in November. Reuters said that Coley later worried Li that the transfers to Merit Peak were happening without her awareness.
Binance. Chen’s role, including her ownership of the accounts and when it ceased, was not addressed by the U.S. Hertenstein said it’s “difficult to speak to each and every detail” because the company’s “management team has turned over completely since the time period in question.”
Juvvadi, Binance.Merit Peak’s fund flows were permissible, according to U.S. legal. He added the internal inquiry linked all Merit Peak transfers with withdrawals from the trading firm’s Binance.US digital asset account. “All the funds belonged to Merit Peak,” he claimed.
Juvvadi did not disclose Merit Peak’s trading activity and Zhao’s position.
