SEC alleges Binance sent Paxos nearly $20B in commingled funds via Merit Peak in 2021

admin June 7, 2023

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The U.S. Securities and Exchange Commission (SEC) has reportedly claimed that Binance transferred nearly $20 billion of mixed funds to overseas affiliates of stablecoin issuer Paxos in 2021. declaration It was prepared by Sachin Verma, Assistant Chief Accountant of the Commission.

Verma, in a June 7 court filing, said that Binance and its CEO Zhao Changpeng managed multiple accounts at the defunct Silvergate Bank and Signature Bank. said it had been used to carry out various transactions involving Zhao-owned companies.

merit peak

The declaration alleges that Binance.US under the name BAM Trading and several other Binance-affiliated accounts transferred millions of dollars from Silvergate Bank accounts to a trading company called Merit Peak Ltd.

Merit Peak is a British Virgin Islands company substantially owned by Zhao. The filing describes the nature of the business as an OTC desk and proprietary trading of digital assets, and Silvergate closed the account in mid-2022.

Nearly $20 billion transferred to Paxos overseas affiliates

“Millions of dollars from Binance-related accounts were mixed into Merit Peak accounts,” Verma said before closing the accounts, which were then transferred to overseas affiliates of stablecoin issuer Paxos. A source said:

“For example, in 2021, funding from Key Vision ($11.05 billion), Prime Trust ($1.1 billion) (through BAM Trading) and Bifinity UAB ($6.3 billion) (through Binance Holdings Limited) will benefit It was transferred to Peak, and Merit Peak transferred all of that money as part of a transfer of about $20 billion to Paxos foreign companies in 2021.”

2021 Merit Peak Transactions (Source: SEC Court Filed)

A closer look at account transactions from 2019 to 2021 reveals that Merit Peak received $22 billion from multiple Binance-affiliated accounts, including $1.2 billion from Binance US. During this period, trading companies transferred $21.6 billion to this foreign company in Paxos.

Binance Merit Peak Transfer — Merit Peak Transactions 2019-2021 (Source: SEC Court filings)

The declaration corroborates previous reports that Binance was hoarding user funds into Silvergate Bank accounts.

Binance has consistently claimed the reports were false, but has yet to respond. of crypto slate Additional comments are requested at time of publication.

Paxos, on the other hand, is the issuer of the Binance USD (BUSD) stablecoin. In February, New York regulators ordered stablecoin issuers to stop minting other BUSD. Binance and Paxos also refused to classify BUSD as a security by the SEC.

Paxos has not responded of crypto slate Requests for comment at press time.

The post, claimed by the SEC, alleges that Binance transferred nearly $20 billion in mixed funds to Paxos through Merit Peak in 2021 and was first published on CryptoSlate.