Bank records and company messages have revealed that Binance US relied on Binance to process payments and cover payroll, in complete contradiction to the firm’s insistence that it operated independently, Reuters reported on Monday.
Now-defunct Silvergate Bank authorized Binance exec Guangying Chen to move funds held in Binance US accounts in 2019 and 2020, bank records revealed. Chen, a close associate of Binance chief Changpeng Zhao (CZ), was asked by US employees to process payments and cover payroll, according to company messages.
In February, Reuters reported that an employee in Chen’s team had access to one Binance US Silvergate account, which transferred over $400 million to Merit Peak, a trading firm controlled by CZ, back in 2021. Further, the outlet reported that Binance commingled customer funds with corporate revenues in Merit Peak’s Silvergate account. Binance denied both investigations.
This latest news further discredits Binance’s claims that its US arm had “exclusive control” of its accounts. According to messages and documents reviewed by the outlet, Chen signed documents allowing her to “open accounts, transact, and otherwise operate” accounts on behalf of Binance US.
Chen further signed agreements with Silvergate to act as ‘Primary Admin User’ for five bank accounts:
- a customer deposit account,
- a corporate clients account that sent funds to Merit Peak, and
- three other accounts.
According to the agreements, Chen was allowed to withdraw and deposit funds and had the authority to grant others the same autonomy. She allowed her deputy, Susan Li, to manage US transactions and approve payments to cover the firm’s payroll. “Approved from my end,” one message Li sent to a Binance US executive read in response to a payroll request.
More worrying, Binance US’s chief exec at the time, Catherine Coley, sent messages saying that she and her team didn’t have control over the accounts, and therefore Binance US lacked control over its own finances. In 2020, Coley and her team repeatedly asked Li to grant them access to Binance US’s own bank accounts and expressed concern over regulatory scrutiny.
“I think it makes sense [Binance US] has its own login for the regulatory perspective,” a Binance US finance director wrote to Li in November 2020. Coley left Binance US in mid-2021 after clashing with CZ over the situation.
According to Binance, however, everything’s kosher. Binance US spokesperson Christian Hertenstein responded to Reuters’ latest findings, claiming that ever since leadership changed hands in late 2021, “no one other than Binance US officials have had control or access to Binance US accounts.”
“Customer funds have not been misused or co-mingled,” Hernstein said, but added that it’s “difficult to speak to each and every detail” because Binance US’s management team has “turned over completely since the time period in question.”