Two offshore trading firms controlled by Binance founder and CEO Changpeng Zhao lie at the centre of the Securities and Exchange Commission (SEC) lawsuit launched against the world's largest crypto exchange, which highlights concerns over client funds.
Together, the two companies allowed Binance to commingle corporate funds with client assets and use the monies "as they please," the SEC wrote. This put customers' assets at risk while Binance sought to "maximize" its profits, the SEC added.it would "vigorously defend" itself against the SEC charges and that all user assets were "safe and secure". The company did not respond to emailed questions about the two trading firms for this article.
After the collapse last year of crypto exchange FTX, regulators are focused on whether Binance has adequately protected billions of dollars in user funds. The SEC action came after the Commodity Futures Trading Commission filed its own charges in March against Binance, which has also been'FUNDS AT RISK'
Merit Peak then used the funds in "transfers that appear to relate to the purchase of BUSD", the SEC said, adding that the transfers placed those funds at risk, including of loss or theft, and were done without notice to customers. It is unclear from the SEC complaint how much money Zhao is alleged to have drawn from Merit Peak and Sigma Chain. However, the SEC said he "personally" received $62.5 million from a Binance bank account between October 2022 and January 2023.
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