First trades at Binance.US involved wash trading, WSJ alleges based on CZ memo
Some of Binance.US’s first cryptocurrency trades took place internally and consisted of wash trades, The Wall Street Journal reports. July 24th.
The magazine reported that $70,000 worth of bitcoin was traded on Binance.US in the first hour of trading in 2019. But according to an internal memo, Binance CEO Changpeng Zhao said of these deals, “I think it’s about us.”
Aside from citing that memo, The Wall Street Journal explained the ongoing lawsuit against the company by the U.S. Securities and Exchange Commission (SEC) in another way.
The SEC lawsuit alleges that Binance.US inflated trading volumes through accounts of companies controlled by Zhao, such as Sigma Chain, and makes similar accusations regarding wash trading. The Wall Street Journal highlighted part of the lawsuit, which the SEC claims wash trades between Sigma Chain accounts and executive accounts accounted for 70% of the trading volume of one cryptocurrency.
The SEC also said that Binance.US was not subject to trading surveillance until at least February 2022. Executive memos provide evidence of oversight, including a document in which executives told former Binance.US CEO Catherine Corey that they would not take any action against self-trading in the absence of regulatory pressure.
The magazine also suggested, based on a 2019 study, that wash trading accounted for more than 46% of the trading volume of Binance’s global division during the study period. The study did not report on Binance’s U.S. arm, as it was still in the process of launching at the time.
Binance Denies Allegations
The Wall Street Journal published an article dissenting from Binance. A Binance spokesperson said the company did not “involve or condone” wash trading.
The spokesperson added:
“We strongly believe that the SEC’s allegations regarding wash trading are completely baseless and based on a fundamental misunderstanding of the facts and misuse of relevant laws.”
The representative also said that Binance views the transaction in question as a “perfectly legitimate exchange” involving an independent strategy. The size of trading activity does not necessarily affect overall trading volume, the spokesperson added.
Binance CEO Zhao Changpeng did not directly respond to the Wall Street Journal article. But he Article reposted This means that he does not agree with the content of the article.
Binance has recently criticized mainstream news sources for reporting on topics such as executive departures, business-to-business deals, and alleged ties to China.
On May 29, Zhao suggested that Binance’s status as the world’s largest cryptocurrency exchange may have attracted such controversial coverage, rather than any outlandish action.
The first trade on Binance.US involved a wash trade, which the WSJ claims was first listed on CryptoSlate based on a CZ memo.
