SEC Accuses Binance of Sending $20B in Commingled Funds to Paxos Foreign Affiliate

Binance Under Fire

The U.S. Securities and Exchange Commission (SEC) has made a shocking allegation against cryptocurrency exchange Binance, claiming it sent approximately $20 billion in commingled funds to a foreign affiliate of stablecoin issuer Paxos in 2021 via Merit Peak trading firm. The declaration was made by Sachin Verma, an Assistant Chief Accountant of the SEC, in a court filing on June 7.

The statement revealed Binance, along with its CEO Changpeng Zhao, held multiple accounts at the now-bankrupt Silvergate Bank and Signature Bank, which were used for transactions involving Zhao's companies. 

Further, according to the court filing, Binance.US, operating under the name BAM Trading, and other Binance-related accounts, transferred millions of dollars to Merit Peak Ltd. from Silvergate Bank.

The filing indicates that Merit Peak received $22 billion from various Binance-related accounts between 2019 and 2021, including $1.2 billion from Binance US. As per the allegations, during this period, Merit Peak transferred $21.6 billion to Paxos' foreign affiliate.

It is not the first time Binance has been accused of mixing users' funds with bank accounts held at Silvergate Bank. However, the exchange has consistently denied these reports but has yet to respond to the recent claims made by the SEC.

It is worth noting that the SEC has recently sued two prominent exchanges, Coinbase and Binance. The US financial watchdog accused Binance and its founder Changpeng Zhao of running a "web of deception," charging them with 13 offenses. In addition, the SEC accused Coinbase of operating as an "unregistered broker, exchange and clearing agency" on Tuesday.

As a result of the recent developments, $BNB has fallen by 7.5% in the last few hours. The cryptocurrency has dropped by more than 15% in the last two days and is currently trading at $257.65, according to CoinMarketCap.

What is Binance:

Binance positions itself as the world’s leading blockchain ecosystem and crypto-asset infrastructure provider with a financial product suite that includes the largest digital asset exchange by volume. The Binance platform aims to increase the freedom of money for users and features a comprehensive portfolio of crypto-asset products and offerings, including trading and finance, education, data and research, social good, investment and incubation, decentralization, and infrastructure solutions.

Where to find Binance:

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