Binance CEO, Changpeng ‘CZ’ Zhao, and Guangying ‘Helina’ Chen, are facing allegations brought forward by the Securities and Exchange Commission (SEC) in a new court document. The document claims that they received billions of dollars in customer funds through their holding company. The SEC found that the funds were sent to firms controlled by Zhao via an intermediary holding company called Key Vision Development Limited.
As a result, the SEC is using the testimony provided by Sachin Verma, an employed accountant, as part of their arguments requesting the court to sign a temporary restraining order to freeze assets on- Binance.US. The reason behind why a Zhao-controlled entity would act as a “pass-through” account for billions of dollars of Binance Platforms customers’ funds remains unclear.
An interesting finding by the SEC through Verma’s forensic analysis shows that $12 billion was sent to Zhao and $162 million to a Chen-controlled company in Singapore. Furthermore, the documents reveal that Chen and Zhao controlled several companies with no obvious connection to Binance in their name. The majority of the funds transferred to Zhao and Chen are now reportedly in offshore accounts.
Chen’s role as Binance’s back office and financial manager has also been brought to light. There has been contradicting information about her controlling accounts belonging to Binance.US, which is supposed to be an independent unit.
Despite public denial from Binance about mixing customer deposits and company funds, the SEC continues to investigate. Binance has maintained that Merit Peak is a vehicle for CZ to trade his “self-made wealth”. However, the SEC investigation into Binance.US, which dates back to at least 2020, alleges that Binance held custody of its U.S. affiliate’s assets until December 2022. This goes against their earlier assurance to regulators and the public that Binance and Binance.US were separate entities.
As regulatory scrutiny increases and allegations continue, the situation raises questions about the transparency and practices of cryptocurrency exchanges. With an upcoming court date set for June 13th regarding the restraining order, it will be crucial to see how this plays out for Binance and the crypto industry as a whole. The outcome may have far-reaching implications for the regulatory environment and for exchanges that may find themselves under similar scrutiny in the near future.
Source: Coindesk
