Centralized cryptocurrency exchange Binance has moved an estimated $400 million from its US Silvergate Bank account to a trading firm managed by CEO Changpeng Zhao, Reuters reported.
Binance reportedly moved the funds between January and March 2021 from a trading account, BAM Trading, to Merit Peak — a company said to be now under investigation by the SEC.
It’s yet to be determined whether the transfers involved customer funds, according to Reuters. But Binance’s public terms from the time show that customer deposits would have been held at Silvergate and Nevada-based Prime Trust.
The situation appears to be Binance’s latest instance of falling under regulatory scrutiny — including getting hit with an SEC Wells notice for issuing “unregulated securities.” A Wells notice is known typically as a precursor to the SEC taking regulatory action against a financial entity.
The crypto exchange has faced mounting recent pressures, including the contraction of its native token, BUSD. Outflows of the stablecoin recently topped $1 billion on news that the SEC gave another Wells notice to BUSD’s issuer, Paxos.
Per bank records, according to Reuters, $650 million was wired from Prime Trust to Binance US’ account over the course of the first quarter of 2021.
The SEC is also investigating the relationship between Zhao and US affiliates Sigma Chain AG and Merit Peak, which has been deemed “likely” to result in financial penalties.
Binance US executives were said to be unaware of the outflows. Catherine Coley, Binance US’ chief executive at the time, called the transfers “unexpected,” according to text messages reviewed by Reuters.
Another Binance executive, Susan Li, reportedly did not address the transactions — but said that Merit Peak was a vendor facilitating trading for Binance.US.
A Binance spokesperson did not immediately return a request for comment.
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Source: https://blockworks.co/news/binance-reportedly-shuffled-funds