Binance, the world’s largest cryptocurrency exchange, is facing allegations of having commingled customer funds with company revenue in 2020 and 2021, violating U.S. financial rules that mandate the segregation of customer money, according to a special report by Reuters. Citing three sources familiar with the matter, the report claims that the exchange held mixed accounts at U.S. lender Silvergate Bank, with sums running into billions of dollars.
According to Reuters’ report, the money flows highlighted a lack of internal controls at Binance, obscuring the location of client assets and risking their security. Despite the serious nature of the allegations, no evidence has been found to indicate that Binance client funds were lost or misused.
The special report by Reuters comes amid increased scrutiny from SEC chair Gary Gensler over the practices of crypto exchanges, with a particular focus on safeguarding client money. While Binance has not been directly targeted by the SEC, it faces allegations from the U.S. Commodity Futures Trading Commission (CFTC) of allowing U.S. customers to trade on its platform despite claims to restrict access.
Binance has refuted the allegations, according to Reuters. Binance spokesperson Brad Jaffe denied the commingling of funds, stating that the accounts in question facilitated user purchases of Binance’s own dollar-linked crypto-token, BUSD, likening the process to buying a product from Amazon.
The report from Reuters has drawn attention to the exchange’s financial operations as it faces civil charges from the CFTC and an ongoing investigation by the Justice Department for alleged money laundering and sanctions violations. The exchange’s banking future is unclear as the crypto sector faces a broader crackdown in the U.S.