Five bank accounts of supposedly independent Binance.US were in fact controlled by senior Binance official, report finds
A senior Binance executive reportedly had primary control over five bank accounts belonging to the cryptocurrency firm’s supposedly independent US affiliate, Reuters has reported.
Silvergate Bank records show that it authorised Binance executive Guangying Chen, a close associate of Zhao, to operate the five accounts in 2019 and 2020, according to the report.
This allowed Chen and her deputies to move funds held in the bank accounts, while Binance.US employees had to ask Chen’s team to process payments, including to cover their own payroll, according to company messages referred to in the report.
Reuters reported that Catherine Coley, then chief excutive of the US firm, signed a banking resolution in December 2019 giving Chen powers to operate the accounts. Coley left Binance.US in 2021.
‘Primary Admin User’
Chen reportedly signed further documents defining her as the “Primary Admin User” for the five accounts.
The US company in April denied anyone outside the company had ever controlled its bank accounts.
The firm more recently said only officials at the company had had access to the accounts since current chief executive Brian Shroder took over in late 2021, without explaining the discrepancy in dates.
Ittold Reuters that “since at least 2021, the only ‘Primary Admins’ on active Binance.US accounts have been Binance.US officials”.
The report comes as Binance and its chief executive Chengpeng Zhao face a civil enforcement action from the US Commodity Futures Trading Commission (CFTC) alleging they wilfully evaded US securities laws by “intentionally structuring entities” to avoid US investor regulations.
The company and Zhao, known as CZ, are also accused of turning a blind eye to US customers making use of the central Binance platform, which is banned in the US, as well as money laundering and other infractions.
Zhao and his company deny wrongdoing. Silvergate collapsed in March and is winding down its operations.
Because Binance had been banned in the US in 2019, it and other investors formed the US firm, a supposedly indepenent entity that would comply with all US laws.
But Chen’s reported control over critical bank accounts of Binance.US indicates that the US firm was a de facto subsidiary of Binance, created to distract US regulators’ attention away from the central exchange, Reuters said.
In February Reuters reported that over the first three months of 2021 Binance transferred more than $404 million (£324m) from a Binance.US account at Silvergate Bank to Merit Peak, a company under the control of Zhao, allegedly another indicator that the US firm – which had been described as a “partner” – was in reality a subsidiary of Binance.
A Binance.US spokesperson said at the time that the report used “outdated information” without giving further details.