The post Binance Exchange Allegedly Commingled Customer Funds and Company Revenue  appeared first on Coinpedia Fintech News

Following the collapse of FTX and Alameda Research last year, the United States government has been more attentive on top crypto exchanges including Coinbase Global, and Binance. Top financial regulatory agencies including the SEC and the CFTC have filed charges against several crypto-related firms to avoid a similar situation with FTX.

Notably, the SEC and the CFTC alleged that the SBF commingled client funds at his trading firm and used the funds to finance his quest for real estate, venture capital investments, and political donations.

Binance Accused of Mixing Customers’ Funds

In the latest developments, a report by media outlet Reuters suggests that Binance mixed customers’ funds with the company’s revenues, in a similar manner FTX did before the collapse. According to the report, Binance mixed customers’ funds between 2020 and 2021 in breach of the SEC rules on handling customers’ funds. Reportedly, Binance mixed users funds and its revenues in billions of dollars mostly at the defunct crypto-related bank Silvergate Bank.

For instance, on February 10, 2021, bank records show that Binance mixed $20 million from a corporate account with $15 million from an account that received customer money.

The Denial

Nevertheless, Binance has vehemently denied the accusations claiming the accounts were meant to facilitate crypto purchases. In the company’s defense, CEO Changpeng Zhao (CZ) has previously noted that the exchange often moves funds between accounts for accounting purposes.

“These accounts were not used to accept user deposits; they were used to facilitate user purchases of crypto,” Binance spokesperson Brad Jaffe noted. “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.”