Binance under fire: accused of using Ethereum account to comingle client funds


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In this post:

  • Despite the SEC indictment, Binance continues to use the Ethereum account, accused of commingling client funds.
  • Recent transactions show funds swiftly transferred from the contentious Ethereum account to Binance US accounts.
  • Binance’s CEO, CZ, admitted to being a shareholder in a non-profit market maker serving Binance during a Twitter Space session.

Binance, the prominent cryptocurrency exchange, continues to employ the Ethereum (ETH) account it was accused of using to commingle clients’ funds as the Securities and Exchange Commission (SEC) indictment against them lingers. The allegations against Binance involve the mingling of funds into accounts controlled by Changpeng Zhao (CZ), the CEO of Binance, namely Sigma Chain and Merit Peak.

The Ethereum account, initially brought to public attention by journalist Mike Burgersburg, alias “Dirty Bubble Media,” remains in use despite the ongoing controversy. Recent transaction data on Etherscan reveals that the account received approximately $7 million in Tether and 299,999 Uniswap tokens, with a combined value of around $1.3 million, from two separate Binance.com accounts. Intriguingly, they were swiftly transferred to Binance US accounts shortly after the funds arrived.

This Ethereum account, established in August of the previous year, has been consistently utilized for moving funds from Binance.com to Binance US. The total amount transferred through this account is $1.4 billion.

Binance has yet to provide a comprehensive explanation for this activity. However, during a Twitter Space session organized after the crash of FTX, a cryptocurrency exchange, CZ admitted to being a shareholder in a market maker that serves Binance. Notably, he emphasized that this market maker does not generate profits.

In the same interview, CZ asserted that Binance is an exchange that operates transparently and honestly, denying any claims of trading against its clients. Nevertheless, the recent SEC indictment accuses CZ of using up to 300 personal accounts for trading on Binance. 

Binance’s response to the SEC’s allegations did not directly refute the claims made. Instead, the exchange stated that clients’ funds were never endangered and criticized the regulator’s actions, asserting they are detrimental to the US’ global financial innovation and leadership position.

The persistence of Binance in using the contentious Ethereum account raises further questions about the exchange’s operations and compliance with regulatory standards. The ongoing controversy surrounding Binance, coupled with the indictment by the SEC, has undoubtedly cast a shadow over the exchange’s reputation and intensified scrutiny from the cryptocurrency community and regulatory bodies alike.

Consequently, Binance faces a critical juncture as it must navigate these allegations and provide a more transparent account of its actions. The impact of this controversy on the broader cryptocurrency ecosystem and the perception of regulatory compliance within the industry remains to be seen.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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