Binance Fiddled With Cash Of Its U.S. Unit Unknown To SEC

Binance, the world’s largest cryptocurrency exchange, reportedly didn’t disclose the extent of its ties and control over Binance.US, a supposedly independent unit set up to comply with US financial regulations, Wall Street Journal reported.

Photo Insert: Binance programmers in Shanghai had control over the software code that supported Binance.US users’ digital wallets, which could give them access to US customer data.

Binance programmers in Shanghai had control over the software code that supported Binance.US users’ digital wallets, which could give them access to US customer data, the WSJ reported, citing internal Telegram text messages from 2019, Danny Park also reported for Forkast News.

A Binance.US spokeswoman cited by the WSJ in the story said the company and Binance never mixed user data.

While Binance said it would no longer accept US customers upon the launch of the US entity, its officials reportedly discussed ways to keep US investors, including encouraging the use of VPNs, the Journal report says.

The WSJ report alleges that Binance did not disclose that BAM Trading, a company it partnered to establish Binance.US, was essentially controlled by Binance chief Changpeng Zhao when registering the US entity with the country’s authorities in 2019. Binance itself was barred from operations in the US in the same year.

The US Securities and Exchange Commission (SEC) is investigating the relationship between Binance.US and two trading firms, Merit Peak Ltd. and Sigma Chain AG, both affiliated with Binance chief Changpeng Zhao, the report said.

The WSJ said the revelations could damage Binance’s position with US regulators. “We have already acknowledged that we did not have adequate compliance and controls in place during those early years,” a Binance spokesperson told Forkast via Telegram.

“While growing at such a rapid pace, we made some initial missteps which have now been rectified.” This admission could cost Binance and Changpeng Zhao billions of dollars and kick them out from doing business in the US.

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