New reports accuse Binance of allegedly controlling US affiliate’s bank account

Following the US SEC’s recent complaint against Binance and its leadership, the exchange was placed under the spotlight, and with it, the microscope. It wasn’t long before new reports started emerging, and this time, Binance was exposed as an alleged entity that held control over the finances belonging to its US affiliate. It was revealed that Guangying Chen, the exchange’s senior executive, supposedly acted as the main operator of five bank accounts belonging to Binance.US.

Not only that, but one of the accounts allegedly also held the funds belonging to American customers who used Binance.US. The reports further state that Chen was authorized to operate these accounts by Silvergate Bank, one of several US banks that filed for bankruptcy recently.

Bank records show that Binance had access to the accounts

According to the bank’s records, Chen operated the accounts in 2019 and 2020, which provided her team with exclusive control over the money stored within. After the news emerged, Binance.US denied that Binance or ts executives controlled any of its accounts. However, the bank records that were recently disclosed, alongside certain messages, say otherwise.

Not only did Binance’s high-ranking officials have access to the funds, but they also exercised tight control over all of Binance.US’ funds. Meanwhile, both companies insisted that Binance.US was completely independent. The bank records and messages suggest that Biannce’s management over the US subsidiary’s finances included access to all bank accounts that the US exchange had with Silvergate. Furthermore, they offer details on how the secret access was granted.

Krishna Juvvadi, Binance.US’ head of legal, revealed in April that employees of BAM Trading — Binance.US’ operator — had exclusive control over the accounts in question. This has been the case ever since Binance.US was founded in 2019. When questioned about this, a spokesperson for Binance.US continued to deny these claims, stating that the US exchange was the only one who controlled the accounts, or was even able to access them, since the company’s acting CEO came into position in the second half of 2021.

The regulators have been cracking down on Binance for months

Additional reports from earlier in 2023 suggest that Chan’s deputy also had access to one of the accounts that Binance.US had with Silvergate. This account saw a transfer of over $400 million in 2021, which went to a trading firm run by Changpeng Zhao. Binance.US explained this by saying that the trading company was simply withdrawing its own funds. However, a report published in May suggested that Binance mixed user funds with company revenue, which is a breach of US financial rules.

The rules clearly state that customer funds must be kept separately, so that the money would not mix, in order to avoid infusion.

The new controversy comes after several regulatory crackdowns on Binance that took place in 2023 alone. In March, CFTC charged the platform and its CEO with the evasion of commodities laws. Then, the US SEC filed its own complaint against Binance and Zhao, with accusations of mishandling users’ funds, lying to investors and regulators, and more.

As a result, Binance finds itself in a very difficult position with an uncertain future. However, the exchange refused to reach a settlement, which will likely lead to a lengthy legal battle.