As part of the ongoing Securities and Exchange Commission (SEC) lawsuit against Binance, the SEC has filed a declaration that details the revenue, profits, and unpaid taxes of Binance US. This filing is in support of the recent temporary restraining order that was requested and, if approved, would prevent Binance CEO and Binance US majority owner Changpeng Zhao (CZ) from using Binance US assets.
Revenue, profits, and taxes
The SEC alleges that Binance US raised approximately $216 million by selling equity. The declaration also says that using the “Internal Revenue Service underpayment penalty rate” results in a prejudgement interest of nearly $15 million.
Furthermore, the SEC alleges that Binance US has made a total revenue of approximately $411 million and a gross profit of $224 million. These figures also result in an IRS underpayment penalty of $13 million.
The declaration includes audits from Armamino LLP, which used to provide audit services to Binance, and details how the company was responsible for the custody of the crypto and some of the transactions between Binance and Binance US.
These audits included the software licensing agreement, the master services agreement, the trademark license agreement, and the wallet custody agreement which all mediated the relationship between Binance and Binance US. Binance controlled the exchange software and custody of the cryptocurrency assets.
The audit from FGMK further details a loan from Binance to Binance US of approximately $26 million in cryptocurrency that was extended in September 2022 and repaid in October 2022.
Bank accounts show payments to a yacht maker
A second declaration details a series of transactions that occurred in Binance and Binance US-controlled bank accounts.
Many of these accounts show transactions between various CZ-controlled entities, apparently used almost interchangeably. The SEC alleges that they were used for the commingling of funds.
A Silvergate Bank account that was controlled by Sigma Chain AG, a CZ-controlled market maker, showed approximately $32 million in withdrawals to Guangying Chen. CZ has previously suggested that Chen’s presence on various corporate documents was purely a byproduct of their initial steps in establishing the company. This same account also showed an $11 million withdrawal to Simpson Marine, a Hong Kong-based yacht seller.
Account details from Signature Bank relating to Binance Capital Management Company Limited showed $62.5 million in withdrawals to CZ, as well as approximately $55 million in withdrawals to INSURED AIRCRAFT TITLE SERVICE LLC, an Oklahoma-based private airplane title and escrow company.
These two declarations were a small sample of the dozens of exhibits that were filed last night as part of this continuing SEC case against Binance and its CEO.