In a court filing, the SEC claimed that Changpeng Zhao’s Merit Peak received billions of dollars in customer funds from Binance’s American exchange.
Binance CEO Changpeng Zhao
On June 8, Binance CEO Changpeng Zhao responded to SEC allegations by denying that one of his holding companies received $12 billion in U.S. customer funds.
Zhao stated about the alleged $12 billion transfer:
“This is simply false … To the best of my knowledge, Binance.US had in total roughly $2 billion in user funds.”
According to Zhao, the value of Binance.US user deposits may have only fluctuated slightly due to crypto prices and user withdrawals.
He claimed that “all user funds are accounted for, and never left the Binance.US platform” unless users made withdrawals.
Zhao’s statement came in response to a Coindesk article, which cited a court filing as its source. He stated that he is “not sure if it’s the journalist or the source” who ultimately provided the allegedly incorrect information.
A representative also told Coindesk that the funds mentioned in the case are “strictly corporate funds and not user assets.”
This, however, appears to be a misunderstanding rather than an admission to fund transfers. The relevant SEC court filing described “accounts” as described by the spokesperson. This appears to refer to company’s Holdings accounts, which held $12 billion from 2020 to 2022.
Court filings back up the $12 billion estimate
Other parts of the SEC filing, however, appear to support the allegation. According to one section, Merit Peak, one of Zhao’s holding companies, received $11 billion in user funds through Key Vision Development Limited between 2019 and 2021.
Merit Peak received an additional $1.2 billion from BAM Trading, another US-related company, according to the $12 billion estimate.
Regardless, the SEC claims that Merit Peak combined the approximately $12 billion in funds with funds from other sources, totaling $22 billion.
The SEC declared:
“The SEC been unable to determine why a Zhao-controlled entity that was purportedly trading on the Binance [sic] using Zhao’s personal funds would have acted as a “pass through” account for billions of dollars of Platform’s customers.”
The SEC’s court filing cites a separate document from its own accountant that contains the same numbers but does not name Binance as the source of those funds.Customer funds from the United States.
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