Key points to remember
- Reuters published an article on May 23, alleging that Binance mixed client money based on an insider scoop.
- Binance denies the allegations, stating that Binance keeps customer and personal funds on two separate ledgers.
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Binance, the world’s largest cryptocurrency exchange by trading volume, flatly denies Reuters claims that it mixed client funds with its own revenue in 2020 and 2021. Patrick Hillmann, Chief Strategy Officer from Binance, fired the report on Twitter as conspiratorial and lacking in substantial evidence, contradicting accusations coming from a “former insider”.
We have addressed this problem several times. We keep our user and company funds on completely separate ledgers. There is a drop in return on investment in responding to these types of tabloid articles. We know who their sources are and @Reuters will be embarrassed when it becomes public.
—Patrick Hillmann (@PRHillmann) May 23, 2023
The Reuters report claims that Binance frequently shuffled billions of dollars in accounts it held at the now defunct Silvergate Bank. The outlet, citing bank documents, alleged that in one instance, Binance mixed $20 million from a corporate account with $15 million from an account containing customer funds.
Fund mixing occurs when a business mixes customer funds with personal funds, preventing proper tracking of customer money in the event of an unexpected loss or other circumstances. according at Cornell Law.
Hillman further stated that “ththere’s no reason for a respected outlet like Reuters to keep making stuff up,” as news publishing has been. go after Binance a few times for alleged money laundering and other related charges.
The allegations come amid a legal battle with the US Commodity Futures Trading Commission (CFTC) which alleged that certain Binance entities had mixed funds. In March, the CFTC sued Binance, claiming that “for years, Binance knew they were violating CFTC rules, actively working both to keep money flowing and to avoid compliance.
In a response to Reuters, Brad Jaffe, a Binance spokesperson, clarified that Silvergate Bank accounts were not used to accept user deposits, but rather to facilitate user cryptocurrency purchases. . Jaffe said that “there was no mixing at any time because it’s 100% corporate funds.” Bitinning founder Kashif Raza summed up on Twitter:
Binance’s spokesperson said earlier:
When users sent money to the account, he said, they were not depositing funds but buying the exchange’s bespoke dollar-linked crypto token, BUSD.
This process was “exactly the same as buying a product from Amazon,” Jaffe said.
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— Kashif Raza (@simplykashif) May 23, 2023
Hillmann further defended Binance, insisting that “user and company funds are kept in entirely separate ledgers.” While it did not outright deny the practice of fund bundling, Reuters did, stating:
“Reuters found no evidence that money from Binance customers was lost or taken.”