Binance Commingled Customer Funds and Company Revenue, Former Insiders Say (reuters.com) 15
An anonymous reader quotes a report from Reuters: The world's largest cryptocurrency exchange, Binance, commingled customer funds with company revenue in 2020 and 2021, in breach of U.S. financial rules that require customer money to be kept separate, three sources familiar with the matter told Reuters. One of the sources, a person with direct knowledge of Binance's group finances, said the sums ran into billions of dollars and commingling happened almost daily in accounts the exchange held at U.S. lender Silvergate Bank. Reuters couldn't independently verify the figures or the frequency. But the news agency reviewed a bank record showing that on Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer money.
The money flows at Binance described by Reuters indicate a lack of internal controls to ensure customer funds were clearly identifiable and segregated from company revenues, three former U.S. regulators said. They said the commingling of these funds put client assets at risk by obscuring their whereabouts. Binance customers shouldn't "need a forensic accountant to find where their money is," said John Reed Stark, a former chief of the Securities and Exchange Commission's Office of Internet Enforcement. Reuters found no evidence that Binance client monies were lost or taken.
The commingling of customer and corporate funds can be a precursor to heavy losses for clients of financial firms. In December, the SEC and CFTC alleged that the founder of the collapsed FTX crypto exchange, Sam Bankman-Fried, for years had commingled client funds at his trading firm and used the monies to finance venture capital investments, political donations and real estate purchases. Bankman-Fried has pleaded not guilty to fraud charges and said he did not knowingly commingle any funds. In a statement to Reuters, Binance denied mixing customer deposits and company funds. "These accounts were not used to accept user deposits; they were used to facilitate user purchases" of crypto, said spokesperson Brad Jaffe.
"There was no commingling at any time because these are 100% corporate funds." When users sent money to the account, he said, they were not depositing funds but buying the exchange's bespoke dollar-linked crypto-token, BUSD. This process was "exactly the same thing as buying a product from Amazon," Jaffe said.
The money flows at Binance described by Reuters indicate a lack of internal controls to ensure customer funds were clearly identifiable and segregated from company revenues, three former U.S. regulators said. They said the commingling of these funds put client assets at risk by obscuring their whereabouts. Binance customers shouldn't "need a forensic accountant to find where their money is," said John Reed Stark, a former chief of the Securities and Exchange Commission's Office of Internet Enforcement. Reuters found no evidence that Binance client monies were lost or taken.
The commingling of customer and corporate funds can be a precursor to heavy losses for clients of financial firms. In December, the SEC and CFTC alleged that the founder of the collapsed FTX crypto exchange, Sam Bankman-Fried, for years had commingled client funds at his trading firm and used the monies to finance venture capital investments, political donations and real estate purchases. Bankman-Fried has pleaded not guilty to fraud charges and said he did not knowingly commingle any funds. In a statement to Reuters, Binance denied mixing customer deposits and company funds. "These accounts were not used to accept user deposits; they were used to facilitate user purchases" of crypto, said spokesperson Brad Jaffe.
"There was no commingling at any time because these are 100% corporate funds." When users sent money to the account, he said, they were not depositing funds but buying the exchange's bespoke dollar-linked crypto-token, BUSD. This process was "exactly the same thing as buying a product from Amazon," Jaffe said.
Well of course (Score:4, Insightful)
How do you sustain a Ponzi scheme otherwise?
Oops. (Score:2)
https://www.binance.com/en/sup... [binance.com]
Re: (Score:2)
https://www.binance.com/en/sup... [binance.com]
Doing business with places like Binance is so scary. The amount of personal information they want to get out of you. And what do they do with that data..? Store it securely? Delete it (securely) when they don't need it any more?
I strongly doubt it.
For one thing, that security around your data is extra work for them to do and I would be surprised if they could be bothered.
For another thing, that data is enormously valuable and would make an excellent income stream. I would be very surprised if they didn't le
More efficient to report on non-scams (Score:1)
Binance had no Caroline in the office (Score:2)
So millions of dollars weren't pushed into bad investments.
No office orgies either. *dorky evil laugh*
Unpossibru (Score:2)
A crypto scam platform did something tricky and illegal to benefit themselves??
Once again, this is my shocked face.
Re: (Score:2)
I'm going with the first option, and its a virtual box that is actually empty.
All your base belong us! (Score:2)
What "customer funds"?
They gave us their money and we kept it.
There are two kinds of people in crypto (Score:1)
Sure bet. (Score:2)
Know where your money is ? (Score:1)
But
No Bank customer should need a forensic accountant to find where their money is. Yet do you know where your money is that you deposited at your bank ?
The recent bank failures clearly show that money of customers wasnt where customers thought it was
Re: (Score:2)