The Invisible Hand: Unveiling Binance's Control Over Its 'Independent' U.S. Affiliate
Cryptocurrency Giant Binance Exerts Stealthy Control Over Binance.US Bank Accounts, Revealing a More Intertwined Relationship Than Previously Disclosed
An executive from cryptocurrency exchange Binance was found to be in control of five bank accounts belonging to Binance.US, Binance's supposedly independent American affiliate, according to bank records. Despite both entities claiming to operate independently, these findings reveal that Binance held significant influence over the financial operations of Binance.US.
Guangying Chen, a senior Binance executive, was authorized by Silvergate Bank to operate these accounts in 2019 and 2020. This authorization allowed her and her team to move funds held in the accounts. Binance.US staff had to request Chen's team to process payments, including payroll.
Binance.US has denied any operation of its bank accounts by Binance, stating that since late 2021, only Binance.US officials have had access to and control over their accounts. Despite this claim, the discrepancy in the time periods given suggests that Binance might have been in control before this period.
The American affiliate of Binance is facing increased scrutiny by regulators in the US. By maintaining secret control over Binance.US's finances, Changpeng Zhao, Binance's CEO, could oversee the company's expansion into the American crypto market while avoiding regulatory scrutiny.
In March, the U.S. Commodity Futures Trading Commission charged Binance and Zhao with intentionally structuring entities to evade U.S. commodities laws. Amidst these allegations, Binance and Silvergate Bank, which collapsed in March, have not responded to comment requests.
Binance's activity of commingling customers' funds with corporate revenues is considered a breach of U.S. financial rules, requiring client money to be kept separate. However, Binance denied this allegation, stating that users were not depositing but buying Binance's bespoke dollar-linked crypto token.