Binance CEO Changpeng “CZ” Zhao and Guangying “Helina” Chen have been accused by the Securities and Exchange Commission (SEC) of receiving billions of dollars in customer funds through their holding company.
The allegations were revealed in a court document filed by the SEC, shedding light on a complex web of financial transactions.
According to the SEC, the funds were funneled to companies controlled by Zhao via an intermediary holding company called Key Vision Development Limited. The evidence supporting these claims comes from testimony provided by Sachin Verma, an accountant employed by the SEC, whose forensic analysis of bank statements exposed the alleged wrongdoing.
The court filing highlights the perplexing nature of the transactions, as the SEC states, “The SEC has been unable to determine why a Zhao-controlled entity that was purportedly trading on the Binance.US Platform using Zhao’s personal funds would have acted as a ‘pass through’ account for billions of dollars of Binance Platforms customers’ funds.”
The SEC alleges that $12 billion was sent to Zhao, while a Guangying Chen-controlled company in Singapore received $162 million. Notably, Chen and Zhao oversaw several companies with no apparent connection to Binance, and the SEC claims that a significant portion of the funds has been moved to offshore accounts.
Chen, identified as Binance’s back office and financial manager, is alleged to have controlled accounts belonging to Binance.US, contradicting the unit’s supposed independence. These findings raise concerns about the commingling of customer deposits and company funds, an assertion that Binance has vehemently denied.
Binance has defended itself, asserting that Merit Peak serves as a vehicle for CZ to trade his “self-made wealth.” However, the SEC’s investigation into Binance.US, ongoing since at least 2020, has revealed that Binance maintained custody of its U.S. affiliate’s assets until December 2022, despite earlier claims of separation.
As the legal battle between Binance and the SEC escalates, the regulator is seeking a temporary restraining order to freeze assets held by Binance.US. A court date has been set for June 13 to address this critical matter.
The outcome of this case will undoubtedly have far-reaching implications for the cryptocurrency industry, as regulators strive to maintain transparency and protect the interests of customers.
The allegations against Binance and its executives have sent shockwaves through the financial world, emphasizing the importance of regulatory oversight in this rapidly evolving sector.