Binance kept Binance US customers’ deposits in Axos Financial, the same bank used by convicted fraudster Reggie Fowler of Crypto Capital Corp, now-bankrupt Prime Trust, and InfoWars’ Alex Jones. However, despite a dubious client list, Axos hasn’t considered its exposure to the crypto industry as a relevant “risk factor” in its quarterly Securities and Exchange Commission (SEC) 10-K filings.
But there are more red flags waving over Axos Financial like the fact that Prime Trust and Binance US’ parent company BAM Trading were Axos customers at the same time. But not only that:
- Prime Trust employed Ponzi-like business practices of using other customers’ assets to fulfill withdrawal requests to hide losses.
- Prime Trust filed for bankruptcy and its CEO admitted to losing $8 million in the Terra LUNA pyramid scheme.
- The SEC is suing Binance US’ founder for a litany of federal law violations.
- The SEC is also suing Terra founder Do Kwon and recently requested that he be extradited to the US.
More specifically, Binance US and BAM Trading held over 10 accounts at Axos with some $377 million worth of customer funds as of May this year. It still held open accounts according to a more recent disclosure.
That Axos voluntarily serves Binance as a customer is odd, particularly as the SEC is suing the parent companies of Binance US and Binance.com, as well as its founder, Changpeng Zhao. After the SEC sued Binance, US customers slowly withdrew funds and stopped using Binance US. Once popular, the exchange has embarrassingly downranked to 63rd among global exchanges.
Consider another potential cause for concern. Axos permits crypto companies to avoid the Federal Reserve’s bank wire system with its own intrabank funds transfer system called AxPay.
AxPay permits customers to transfer money 24/7 between accounts at Axos Financial. The system is similar to Signature Bank’s SigNET and Silvergate’s SEN. Worryingly, both Signature and Silvergate banks collapsed into liquidation.
Far from disclosing crypto as a risk factor in its quarterly filings, Axos actually bragged about its lack of crypto dealings, claiming that its lack of crypto exposure ranked among its “franchise differentiators.”
Despite these claims, Axos began accepting Binance US-related deposits in January 2023.
Axos’ dizzying array of red flags
Curious events at Axos continue. For example, Axos Bank’s CEO recently starting selling his own shares in the company. He, of course, claimed that he merely needed to make an unremarkable interest payment on a margin loan.
Rumors are also swirling. An attorney for Axos, James Ethan McComb, might be under investigation by the California State Bar for perjury. Protos has, however, been unable to verify this particular rumor due to the confidentiality treatment of state bar proceedings.
Axos’ questionable business decisions included acquiring the penny stock trading company COR Clearing. Since then, COR Clearing has had to settle with authorities over allegations of violating anti-money laundering regulations.
Axos held assets for Donald Trump, who committed fraud in New York. A federal judge revoked all of his business licenses in the state.
The bank also gave a significant margin loan to B. Riley Financial’s Brandon Riley, who put up 60% of his shares in B. Riley Financial as collateral.
Axos also worked with Infowars’ Alex Jones until September 28, 2023. Axos cited unauthorized transactions as a reason to terminate the relationship but an attorney for Jones’ organization said that “they had no answers” to queries regarding why the accounts were suddenly closed.
In short, Axos Bank is the latest crypto-friendly bank to take a chance on questionable individuals and organizations.
A concerning paper trail indicates that Axos Bank has maintained customer relationships with questionable business operators, including Alex Jones, Prime Trust’s Scott Purcell, Binance’s CZ, and others. Worse, the bank’s CEO has been selling shares in the company.