Binance has been accused of mixing customer funds with company revenue in 2020 and 2021, violating US financial rules that require customer funds to be segregated.
Reuters reported the allegations, noting that the mixing of funds occurs almost daily in accounts held at Silvergate Bank – a US-based, crypto-friendly bank. The amount involved is believed to be in the billions of dollars, according to an individual familiar with Binance's financial operations.
Screenshot of instructions posted on Binance's website in December 2020 showing users how to deposit money into Silvergate Bank.
Reuters did not verify the exact figures or frequency of the mixing. However, according to a Reuters review of bank records dated February 10, 2021, Binance mixed $20 million in company funds with $15 million from customer deposit accounts.
Three former US managers claim that cash flow at Binance, as described by Reuters, shows a lack of internal controls to ensure that client funds are clearly identified and segregated from the company's revenue. .
They explain that mixing these funds puts clients' assets at risk by concealing where the funds are, as John Reed Stark, former Director of the SEC's Office of Internet Enforcement, has stated.
However, Reuters did not find any evidence that Binance lost or embezzled customer funds.
A spokesperson for Binance, Brad Jaffe, denied the allegations of mixing customer deposits with company funds.
The world's largest cryptocurrency exchange, Binance, has escaped a lawsuit related to an online "pig slaughter" crypto scam that took place on dating app Tinder.
On May 22, US District Judge Amos Mazzant ruled that there was no evidence that Binance Holdings Ltd. assisted and abetted the scam – which involved a Texan woman being scammed out of $8 million by a man she met on Tinder.
According to the filing, Texas woman Divya Gadasalli was "promised by a man named "Jerry Bulasa" on Tinder of romance and financial prosperity," but ended up losing more than $8 million.
Excerpted from the Gadasalli case v. Bulasa, 4:22-cv-00249
Gadasalli claims Bulasa convinced her to transfer millions of dollars that turned out to be part of a "pig slaughter" scheme - whereby scammers spend weeks or months building fake relationships with victims to trick them send money.
In March 2022, the plaintiff filed a complaint against Binance and several other defendants including TD Bank, Abacus Federal Savings Bank, and exchange Poloniex seeking urgent action.
Gadasalli initially argued that Binance was involved because it provided services to scammers.
She argued that Binance and Binance.US were the same entity and that everyone used a VPN (virtual private network) to access the exchange.
However, Judge Mazzant ruled that the plaintiff “was unable to point out a single fact about how Binance was actually involved in this case.”
The judge added that Gadasalli could not prove that any of the fraud occurred in Texas because Binance and Binance.US were banned from operating there.
The result is a small victory for Binance, although the company remains on the radar of US financial regulators in the field of litigation.
In a move that reflects escalating tensions between the United States and Russia, the Russian Foreign Ministry has released a list of sanctions targeting 500 American individuals from a variety of businesses, government agencies and the entertainment industry. . Among those affected was BJ Kang, the former chief of investigation at Binance US.
Russia's action comes amid growing tensions between the two countries. During the summit on May 19, the US and Japan announced their intention to impose sanctions on hundreds of organizations and individuals involved in the Russia-Ukraine conflict.
According to information published on the website of the Russian Foreign Ministry, individuals on a crackdown list are prohibited from traveling to Russia. The announcement made on May 19 included a number of notable figures such as former US President Barack Obama, comedian Seth Meyers and talk show host Stephen Colbert. BJ Kang, ranked 147th on the list, is a former agent of the US Federal Bureau of Investigation (FBI).
Kang has 20 years of experience working at the FBI, especially in the National Cyber Investigations Joint Task Force (NCIJTF) in the Washington Field Office. During his tenure at the NCIJTF, Kang collaborated with the Internal Revenue Service (IRS), the United States Secret Service (USSS) and the Financial Crimes Enforcement Network (FinCEN) in handling cases involving electronic money.
In addition, Kang earned the nickname "the scariest man on Wall Street" after participating in the campaign to bring down Bernie Madoff, the mastermind behind the $65 billion Ponzi scheme. He also led the investigation of Raj Rajaratnam, the founder of hedge fund Galleon Group, into insider trading alleged by the US Securities and Exchange Commission (SEC).
In October 2022, Binance US established a new investigative unit to combat illegal activities on the platform, led by BJ Kang.
Russian authorities did not specify the reason for putting Kang on the crackdown list. The agency statement referred to Kang as an FBI agent.
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According to AZCoin News