Calay News
According to Reuters reports citing sources familiar with the matter, Binance, the world’s largest cryptocurrency exchange, would have commingled its customers’ funds with the company’s revenues during 2020 and 2021, violating US financial regulations that require keeping users’ money separate.
According to one of the sources, the sums of money amounted to billions of dollars and were combined almost daily in accounts held by Binance at the US bank Silvergate. A bank record accessed by Reuters shows that on February 10, 2021, Binance commingled $20 million from a corporate account with $15 million from an account that received money from customers.
Former US regulators have expressed concern that this commingling of funds puts customer assets at risk. John Reed Stark, former head of the US Securities and Exchange Commission’s Office of Internet Enforcement, said Binance users should not have to rely on a forensic accountant to find out where their money is.
For its part, Binance has denied commingling customer deposits with company funds. Company spokesman Brad Jaffe told Reuters that these accounts were not used to accept deposits from users but were used to facilitate cryptocurrency purchases by users.
However, former US regulators have pointed out that Binance’s previous statements to its customers, referring to the transfers as deposits, created the expectation that users’ funds would be protected in the same manner as traditional cash deposits. This discrepancy has raised questions about Binance’s practices and its compliance with financial regulations.
