Binance, the world’s largest cryptocurrency exchange, has been accused of blending client funds with its own corporate revenue in violation of U.S. financial regulations, according to three unnamed sources cited in a Reuters report on Tuesday. This breach reportedly occurred in 2020 and 2021. 

See related article: Binance suspends Australian dollar services

Fast facts

  • One of the sources alleged that the commingled sums amounted to billions of dollars, Reuters reported. The source reportedly said that the commingling happened almost daily in Binance’s accounts held at Silvergate Bank, a crypto-focused bank that shut operations following a meltdown in March.
  • Reuters added that it “found no evidence that Binance client monies were lost or taken.”
  • The report comes two months after the U.S. Commodity Futures Trading Commission sued Binance for allegedly violating derivatives rules by allowing U.S. residents to trade financial instruments involving digital assets. Binance has rejected the allegations. 
  • “The whole base of their story this morning, is that when users purchased BUSD (Paxos) from Binance, they were taken to a transaction page that had the term ‘deposit’ on it. Users were making a purchase of a stablecoin that was redeemable by Paxos, which was explicitly stated on the page,” tweeted Patrick Hillmann, the chief communications officer of Binance, in response to the Reuters report.
  • Despite the allegation, Binance’s BNB token rose 1.28% to US$313.71 in the 24 hours leading up to 11:04 p.m. in Hong Kong, according to CoinMarketCap. BNB’s price increase was part of a greater crypto market surge on Tuesday.

See related article: Binance exits Canada amid increased regulation in North America