Binance Accused Of Commingling User Funds

It’s been an interesting ~12 months for crypto’s largest exchange, Binance:

• They were exposed for having questionable ties to the always controversial Justin Sun.

• They were under investigation by the SEC for a wide range of possible transgressions.

• They were accused of serving as a conduit for the laundering of $2.35 billion in illicit funds.

• Their deal to acquire Voyager blew up, and the SEC began poking around Binance.US.

• Paxos was ordered to stop issuing Binance’s BUSD stablecoin.

• And the CTFC is on their case as well.

Now, we have yet another interesting report on Binance, this time coming from their frequent antagonist Reuters.

Commingling Of Customer Funds

The use of “commingling” and “customer funds” in the same sentence sends shivers down the spine of anybody who had money in FTX.

If Reuters is to be believed, it happened at Binance as well.

According to sources with knowledge of Binance’s financial dealings and bank records from 2020 and 2021 seen by Reuters:

• Billions of dollars and commingling happened almost daily

• This commingling happened in a CZ (Binance’s CEO) controlled account at the now defunct Silvergate bank

• Binance then converted these funds into their BUSD stablecoin

The motives behind these moves were two-fold:

• To hide money from the tax man

• To get money out of banks, which CZ distrusted

Commingling user funds is extremely illegal and obviously wouldn’t help their case with the regulators. So, as is to be expected, Binance vehemently denied the charges.

FUD or Facts?

In crypto, where there is smoke, there is often fire. And when considering the FTX blowup, all the concerning stories surrounding Binance, and the fact that they “mistakenly” mixed user funds earlier this year, this smoke is reaching forest fire levels.