Binance Addresses Allegations of Mishandling User Funds Raised by Reuters

Binance, the world’s largest cryptocurrency exchange, has been accused of comingling billions of dollars worth of customer assets with its corporate revenue in 2020 and 2021, according to a report by Reuters. The report cited multiple anonymous sources familiar with the matter, one of whom had “direct knowledge of Binance’s group finances.” Binance’s Chief Communications Officer, Patrick Hillmann, called the story “weak” and xenophobic but admitted that Binance has had “regulatory shortcomings” in the past.

The comingling allegedly happened “almost daily” in accounts Binance held with Silvergate, a now-collapsed crypto-supportive bank that’s been investigated for helping the bankrupt FTX exchange comingle funds with Alameda Research. Binance told Reuters that none of the funds within its Silvergate accounts were “customer deposits,” but rather funds used to purchase BUSD, Binance’s native dollar-pegged stablecoin.

However, throughout 2021, the exchange’s website represented dollar transfers to its platform as “deposits” that would be “credited” to their accounts as BUSD, creating potential confusion about regulatory safeguards around those transfers. Paxos, the issuer behind BUSD, was forced to stop issuing new stablecoin tokens in February after receiving a Wells Notice from US regulators.

In response, Hillmann asserted that customers were explicitly told on the website that their “deposits” would be used to purchase BUSD. He also called out one of Reuters’ qualifying statements that it found “no evidence” Binance clients had lost any money, which he considered a “transparent attempt to protect themselves from a libel suit.” Hillmann went on to accuse Reuters of implicit “xenophobia” for frequently mentioning CEO Changpeng Zhao’s Chinese ethnicity. The executive has clarified in the past that Binance is not a Chinese company and that he’s been a Canadian citizen since the age of 12.

J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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