Global cryptocurrency exchange Binance had secret access to a bank account belonging to its purportedly independent U.S. partner and transferred large sums of…
Over the first three months of 2021, more than $400 million flowed from the Binance.US account at California-based Silvergate Bank to this trading firm, Merit Peak Ltd, according to records for the quarter, which were reviewed by Reuters. The Binance.US account was registered under the name of BAM Trading, the U.S. exchange’s operating company, according to the records. Company messages show the transfers to Merit Peak began in late 2020.
Coley, who left Binance.US later in 2021, didn’t respond to questions sent via her legal representatives. Li also didn’t respond. Susan Li, the Binance finance executive, had access to the Binance.US Silvergate account, however, along with several senior Binance.US employees, according to the messages and the person with direct knowledge of the transfers. In one message, a Binance.US finance manager asked Li to give another Binance.US employee authority to approve payments from the account. A 2021 Binance.
Over the January-March 2021 quarter, the Binance.US account received $1.3 billion in SEN transfers from corporate clients trading on Binance.US, along with the $650 million in wire transfer deposits from Prime Trust.The role of trading firms at crypto exchanges such as industry leader Binance has been under scrutiny since rival FTX collapsed in November.
Among the dealers on Binance.US was Merit Peak, according to company messages, the trading firm managed by CEO Zhao. Merit Peak was incorporated in the British Virgin Islands in January 2019. That December, Zhao signed a purchase agreement for Merit Peak to invest $1 million into Binance.US operator BAM Trading’s holding company in return for a portion of the holding company’s preferred shares. The agreement identified Zhao as Merit Peak’s “Manager.”Article content
Binance.US and Binance didn’t respond to Reuters’ questions about the SEC’s case, but Binance’s chief strategy officer, Patrick Hillmann, told the Wall Street Journal on Wednesday the company was “working with regulators to figure out what are the remediations” to resolve investigations. The Justice Department is also investigating Binance for suspected money laundering and sanctions violations, Reuters has previously reported.
Coley, on the morning of Dec. 23, flagged a “very large withdrawal” by Merit Peak of $7.5 million from the Binance.US account. Binance.US staff referred to the transfers to Merit Peak as “withdrawals,” messages show, because Binance.com employees were initiating them.Article content “Who is directing this?” Coley asked, noting that other senior Binance.US employees were not aware of the transfers either.
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