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Binance Faces Allegations of Co-mingling Company Revenue with Customer Funds in the U.S.

According to a Reuters report, Binance, the largest cryptocurrency exchange in the world, has been

accused of commingling company revenues with customer funds in the United States.

According to a source with direct knowledge of Binance’s group finances, the mixing of customer funds

and company revenues occurred on an almost daily basis in bank accounts held by the exchange at

Silvergate, a crypto-friendly bank that has since declared bankruptcy.

According to three sources cited by Reuters, the mingling of funds at Binance took place during the years

2020 and 2021. This action was in direct violation of US laws, which mandate the segregation of customer funds from company revenues.

Lack of Internal Control

Meanwhile, former regulators quoted in the article pointed out that the commingling of funds

demonstrates a deficiency in Binance’s internal controls. They further highlighted that this situation jeopardizes the safety of customer funds.

According to John Reed Stark, a former chief of the SEC’s Office of Internet Enforcement, Binance

customers should not have to rely on a forensic accountant to track down the whereabouts of their money.

Commodity Futures Trading Commission (CFTC) for allowing US traders to trade derivatives on Binance’s

international exchange, which officially does not accept US clients.

Binance Refutes Allegations

In a statement given to Reuters, Binance refuted any claims of commingling customer and corporate

According to Binance spokesperson Brad Jaffe, these accounts were utilized for facilitating user purchases

of cryptocurrencies rather than accepting user deposits, as stated to Reuters.

The spokesperson emphasized that there was never any commingling of funds as these accounts exclusively consisted of corporate funds.

Furthermore, on Tuesday, the company took to Twitter to express their disagreement. Binance Chief Communications Officer Patrick Hillmann referred to the story as “weak.”

In a series of tweets, Hillmann commented, “This story is incredibly weak to the point that they had to

include upfront, ‘Reuters found no evidence that Binance client funds were lost or taken,’ as a transparent

attempt to shield themselves from a potential defamation lawsuit.”

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