Binance, the world’s largest cryptocurrency exchange, faces accusations that it mixed client funds with company revenue in 2020 and 2021, violating US financial rules that require segregation of client money. , according to a special report. report by Reuters. Citing three sources familiar with the matter, the report claims that the exchange had mixed accounts at US lender Silvergate Bank, with sums running into the billions of dollars.
According to the Reuters report, the money flows highlighted the lack of internal controls at Binance, obscuring the location of client assets and putting their security at risk. Despite the seriousness of the allegations, no evidence has been found to indicate that Binance client funds have been lost or misappropriated.
The Reuters special report comes amid heightened scrutiny by SEC Chairman Gary Gensler over the practices of cryptocurrency exchanges, with a particular focus on protecting client money. While Binance has not been directly attacked by the SEC, it does face allegations from the US Commodity Futures Trading Commission (CFTC) from allowing US clients to trade on its platform despite claims to restrict access.
Binance has refuted the allegations, according to Reuters. Binance spokesman Brad Jaffe denied the mixing of funds, stating that the accounts in question facilitated user purchases of Binance’s dollar-pegged crypto token, BUSD, likening the process to purchasing an Amazon product.
The Reuters report has drawn attention to the exchange’s financial operations as it faces civil charges from the CFTC and an ongoing investigation by the Justice Department for alleged money laundering and sanctions violations. The banking future of the exchange is unclear as the cryptocurrency sector faces a broader crackdown in the US.
