In a surprising turn of events, Binance.US, the American branch of the popular cryptocurrency exchange, has revealed staggering losses of $181 million in 2022. This disclosure, resulting from a recent filing with the Securities and Exchange Commission (SEC), comes in spite of financial backing from its parent company, BAM Management, which provided Binance.US with $132 million last year.
According to FGMK, the auditor responsible for reviewing Binance.US’s financials, a series of tumultuous market conditions in the crypto sphere contributed to the company’s losses. It’s worth noting that Binance.US experienced a substantial increase in revenue, totaling nearly $150 million in 2021, driven by surging cryptocurrency prices and heightened investor interest.
However, upon examination of the filed documents, we unveil a history of financial difficulties for the exchange. In its first operational year of 2020, Binance.US faced a loss of almost $400,000. Additionally, the filings exposed extensive monetary exchanges between Binance.US and numerous other organizations, controlled by Binance CEO Changpeng Zhao (CZ). Among these transactions, $21.6 billion was sent to Paxos Trust Company, the issuer of Binance’s stablecoin, Binance USD (BUSD).
This disclosure comes on the heels of the SEC’s announcement on Monday that it is filing a lawsuit against Binance and its CEO, claiming “blatant disregard” for the agency’s rules. Additionally, SEC documents shed light on various foreign entities connected to CZ – including those in the UAE, the Seychelles, Singapore, Lithuania, and Kazakhstan – only a portion of which include the word “Binance” in their names. Furthermore, these documents reveal accounts held with the now-defunct Signature Bank.
Observers argue that this legal action against Binance is rooted in a broader crackdown on cryptocurrency within the United States. For instance, rival crypto exchange Coinbase has faced similar scrutiny from the SEC, who have identified several tokens listed on its platform as unregistered securities. The sale and promotion of unregistered securities are in violation of US law and, as such, the SEC asserts that exchanges participating in this form of trade are breaching regulations by not registering as securities exchanges.
As the cryptocurrency industry gains momentum, regulatory authorities increase their pressure on exchanges like Binance and Coinbase. While the ongoing legal battles between these entities and financial regulators may result in temporary setbacks, they serve to highlight critical questions surrounding cryptocurrency’s place within the global financial landscape.
Source: Cryptonews
