Cryptocurrency exchange Binance has denied allegations of mismanagement of customer funds. Binance's denial came in response to a Reuters report that said the cryptocurrency exchange was commingling customers' funds with the company's revenue.
The Reuters report said Binance violated US banking regulations that require customer funds to be held separately. The exchange mixed its corporate revenue with client funds in 2020 and 2021, and that mixing happened on a daily basis, the report said.
Reuters cited three insiders with knowledge of the cryptocurrency exchange's finances as saying that most of the mixing took place in accounts at the now-defunct Silvergate Bank and amounted to billions of dollars. The report said that users' money was wired into the Silver gate account of Key Vision Development, a Seychelles-based company owned by Binance CEO Changpeng Zhao. Binance reportedly informed Silvergate that the primary function of the Key Vision account is to collect US dollar donations from non-US customers.
The report further claimed that another Silvergate-based account linked to the Binance CEO's Cayman company was used to convert funds into the US dollar-pegged token Binance USD However, the Reuters report also noted that it found “no evidence that Binance customers' funds were lost or stolen.”
Cointelegraph reached out to Binance about the allegations and received a Twitter response from Patrick Hillmann, Binance's head of communications. Hillman called the Reuters report a "1,000-word conspiracy theory" in his tweet. The Binance exec explained that Reuters' entire claim is based on on deposit-based USD minting by users who buy a stablecoin redeemable by Paxos, which is clearly stated on the page. Austin Federa, Solana's head of strategy, questioned why Hillmann hadn't specifically refused the fund-mixing claim, an issue the Binance executive claimed the exchange had repeatedly addressed.
“We keep user and company funds on completely separate ledgers. The ROI of responding to these types of tabloid stories is falling. We know who their sources are, and when it becomes public, Reuters will be embarrassed,” said Hope. Erman added. The latest spate of charges against Binance for violating US banking laws comes within months of the CFTC filing a lawsuit against the exchange.
