As the Binance-SEC lawsuit receives more attention, a recent Bloomberg report reveals that the crypto exchange and its affiliate firms moved an astounding $70 billion through their accounts at Silvergate Bank and Signature Bank, both of which filed for bankruptcy earlier this year. This revelation raises questions about the transparency of funds movement and the role of banks in the crypto industry.
According to a filing on Wednesday, June 7, large sums of money flowed in and out of Binance’s accounts at these banks within days. Silvergate Bank facilitated a total of $50 billion across Binance-related parties, while Signature Bank handled over $19 billion. Some of these funds were then transferred to foreign entities based on financial records such as bank statements, canceled checks, and wire transfers. It is important to note that these transactions took place from 2019 until this year, before the bankruptcy filings.
The SEC’s case against Binance alleges that the exchange mishandled client funds without disclosing their origin and usage. Wednesday’s filing aimed to support the motion to freeze assets of Binance.US but did not bring any new charges. Binance has responded by stating that the transfers mentioned in the document were not related to client funds but were part of regular business operations.
The report also informs that Binance.US and its affiliates participated in Silvergate’s SEN network and Signature’s Signet platform, allowing the exchange to transfer funds seamlessly and instantaneously 24×7. The filing highlights how Binance CEO Changpeng Zhao was the sole beneficiary of several foreign companies with accounts at Signature Bank, which include entities from the UAE, Canada, Seychelles, Lithuania, Singapore, and Kazakhstan. Some of this money, according to the filing, eventually ended up in Zhao’s personal account.
These recent disclosures pose concerns about the transparency of funds movement, especially in cases where large sums are being shuttled between banks and crypto exchanges. Binance’s relationship with Silvergate Bank and Signature Bank raises questions about the extent to which banks are involved in facilitating transactions for crypto firms.
Nevertheless, banks like Silvergate and Signature have played a crucial role in providing financial services to the crypto industry, which faces numerous challenges in gaining mainstream acceptance. From a broader perspective, the growing involvement of financial institutions in the crypto market could promote better regulatory compliance and transparency. On the other hand, risks associated with bank involvement in crypto transactions might encourage even more stringent regulatory oversight from authorities.
While the Binance-SEC lawsuit unfolds, the debate on regulations, funds movement, and the role of banks in the crypto space continues to heat up. As the industry moves forward, developing a robust framework to address transparency, security, and efficiency will be vital for the future of cryptocurrencies and blockchain technology.
Source: Coingape
