Reuters casts opprobrium on Binance and CZ. Legitimate suspicions or relentlessness against the largest exchange in the world which has more than 120 million customers?
Arrangements à la FTX?
A new case splashes CZ after it was already pinned down because of its Binance-Peg BUSD stablecoin not being 100% covered.
Reuters reports that Binance executives made (early 2021) 89 transfers worth $404 million from a bank account owned by Binance.US to trading firm Merit Peak.
However, the director of Merit Peak is none other than Changpeng Zhao (CZ), founder of Binance. The Reuters article suggests that we are potentially in an FTX scenario.
There is indeed a thinly veiled parallel between Alameda and Merit Peak:
“The SEC is accusing FTX founder Sam Bankman-Fried of secretly diverting billions of dollars in client funds to his trading firm, Alameda Research, which operated as a Market Maker on FTX.”
We do not know at this time if these transfers are illegal. We will have to wait for the SEC, or even the courts, to look into this case.
Anyway, Binance and Binance.US are presented as two independent entities. One must respond to US regulators, while the other escapes it. As two independent companies, neither should have access to the other’s accounts.
Overwhelming text messages?
Text messages exchanged between Binance.US CEO Catherine Coley and a Binance executive suggest that Binance.US was primarily created to distract US regulators from its global operations.
Catherine Coley allegedly wrote to a Binance executive asking for an explanation of these transfers, calling them “unexpected” and claiming that “nobody talked about it”says Reuters. “Where do these funds come from? »asked C. Coley.
Binance CEO Susan Li did not explain the transfers, but said Merit Peak was a Market Maker that facilitated trading on Binance.US.
Regarding this famous bank account, it is an account with the Californian bank Silvergate. Reuters says it does not “to have been able to find out what happened to the $404 million”, and if “these funds transferred to Merit Peak were those of Binance.US clients”.
However, the agency lets go “that an unspecified amount of this money was then sent to the Silvergate account of another Seychelles incorporated company called Key Vision”another company administered by CZ.
All that said, Binance has created at least 73 companies around the world, 59 of which Zhao partially owns or controls. Reuters is therefore perhaps a little hasty in its barely veiled conclusions.
Binance denies
Binance.US denied outright, saying in a tweet that “Only Binance.US employees have access to bank accounts, period”.
“Merit Peak ceased all activity on the platform in 2021”, adds Binance.US. “Binance.US has never loaned or used client funds to trade.”
The exchange denies any resemblance to FTX, which siphoned off about $10 billion of client funds and sent them to Alameda Research, a trading company owned by CEO Sam Bankman-Fried.
“Many attempts have been made to draw a parallel between Binance.US and fraudulent exchanges that have gone bankrupt. The real facts speak for themselves: there is no comparison”launched Binance.US, without mentioning the name FTX.
Changpeng Zhao has yet to comment on the Reuters article, but tweeted this on February 17:
“Don’t forget the 4. But focus on the first 3”tagging tweet dating from January. The “4” refers to “ignore FUD, fake news, attacks, etc. ».
Going by that logic, the Reuters article would be just a dumping of FUD. We will see.
Let’s end by pointing out in passing that CZ still refuses to give details of the jurisdiction or the name of the entity behind its exchange…
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