Binance Accused of Mixing Customer Funds and Company Revenues in the US

Binance, the world’s largest cryptocurrency exchange, has reportedly mixed its customer funds with company revenues in the United States. According to a Reuters report, this practice has occurred regularly in bank accounts held by the exchange at the now-defunct crypto-friendly bank Silvergate. The report cited an individual who was privy to Binance’s group finances.

Violation of US Laws

This comingling of funds occurred numerous times in 2020 and 2021, according to the three sources cited by Reuters. However, this practice is in violation of US laws that require customer funds to be kept separate. The mixing of funds puts customer funds in danger, according to former regulators who commented on the article.

Binance’s Response

In a statement to Reuters, Binance denied ever mixing customer and corporate funds, stating that the accounts were used to purchase cryptocurrencies on behalf of customers. The spokesperson for Binance, Brad Jaffe, told Reuters that “These accounts were not used to accept user deposits; they were used to facilitate user purchases” of cryptocurrency. The spokesperson added that there was “no commingling at any time because these are 100% corporate funds.”

Binance’s Previous Legal Troubles

Earlier this year, Binance was sued by the US Commodity Futures Trading Commission (CFTC) for allowing US traders to trade derivatives on its international exchange, which did not accept US clients officially. The new allegations against Binance come on the heels of this legal action.

Binance Chief Communications Officer Patrick Hillmann took to Twitter to denounce the Reuters report, calling it “weak.” Hillmann went on to say that the article’s statement that “Reuters found no evidence that Binance client monies were lost or taken” was a “transparent attempt to protect themselves from a libel suit.”

Binance has been accused of mixing customer funds with company revenues in the United States. This practice is in violation of US laws that require customer funds to be kept separate. Binance has denied these allegations and stated that the accounts in question were used to purchase cryptocurrencies on behalf of customers. The accusations come after Binance was sued earlier this year by the US Commodity Futures Trading Commission (CFTC) for allowing US traders to trade derivatives on its international exchange.