Binance disputes claims of financial misuse, calling them conspiracy theory
Binance allegedly informed Silvergate that the Key Vision account's primary goal was to collect money from non-American customers.
Accusations that the cryptocurrency exchange Binance mismanaged consumer money are denied. In reaction to a Reuters article that said the cryptocurrency exchange camelid user cash with business earnings, Binance denied the claim.
According to the Reuters article, Binance broke American banking laws requiring the segregation of client funds. In 2020 and 2021, according to the investigation, the exchange allegedly mingled corporate income with client cash on a regular basis.
Binance dismisses the charges of improper fund management as a "conspiracy theory"
The cryptocurrency exchange Binance refutes claims that it misused user funds. Binance refuted the allegations made in a Reuters story that the cryptocurrency exchange mixed customer funds with revenue. The Reuters story claims that Binance violated American banking regulations that provide for the segregation of client money. The inquiry claims that the exchange routinely mixed customer cash and company profits in 2020 and 2021.
As per Reuters, which quoted three insiders with knowledge of the cryptocurrency exchange's finances, the majority of comingling took place on accounts maintained at the now-defunct Silvergate Bank, with the total value reaching billions of dollars.
Customers wired funds to Changpeng Zhao, the CEO of Binance's firm Key Vision Development, which was located in Seychelles. According to reports, Binance told Silvergate that the main purpose of the Key Vision account was to gather money from non-American consumers.
The article further claimed that funds were transferred into the dollar-linked Binance USD token via a second Silvergate-based account connected to the Cayman business of the Binance CEO. There was, according to the Reuters article, "no evidence that Binance client funds were lost or taken," though.
When sources contacted Binance for comments on these claims, Patrick Hillmann, the chief of communication at Binance, led them to a Twitter statement. In a tweet, Hilmann referred to Reuter's article as "1000 words of conspiracy theories."
The Binance executive clarified that Reuter's whole assertion is based on user deposit-based USD minting, where consumers were buying a stablecoin that was openly declared on the page to be redeemed by Paxos.
Austin Federa, the head of the strategy at Solana, questioned why Hillmann did not directly deny allegations of fund commingling. The Binance executive said that the exchange has addressed this matter on several occasions.
We maintain totally separate ledgers for user and business funds. The return on investment for reacting to these kinds of tabloid articles is diminishing. We are aware of their sources, and Reuters will seem foolish once the information is made public, Hillmann continued.
The Commodity Futures Trading Commission filed a complaint against Binance a few months prior to the latest flurry of charges against the exchange about possible violations of U.S. banking rules.
Let us see how this act affects future crypto regulation.
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