Binance, the world’s largest cryptocurrency exchange, has reportedly accessed a bank account belonging to its U.S. partner without authorization.
According to Reuters, the unauthorized access enabled Binance to transfer large sums of money from the U.S. partner’s account to a trading company controlled by its CEO, Changpeng Zhao, also known as CZ.
Banking records and internal messages obtained by Reuters show that more than $400 million was transferred from an account belonging to Binance.US held at Silvergate Bank in California to Merit Peak Ltd., a trading firm controlled by CZ, in the first quarter of 2021.
The account was registered using BAM Trading, the operational firm for the United States exchange. Transfers to Merit Peak started in late 2020, according to the company’s information.
The terms of service published at the time of the transfers indicated that Silvergate and the custodian company Prime Trust LLC, located in Nevada, controlled the dollar deposits made by the exchange’s customers. However, Binance reportedly wired the funds without the knowledge of its U.S. partner.
Binance.US management expressed concern about the outflows and requested an explanation for the payments, which they referred to as “unexpected.” Emails seen by Reuters showed that no one addressed their concerns.
The U.S. government disputed the accuracy of the reporting, calling it “outdated information.” However, the allegations are likely to raise concerns about Binance’s compliance with U.S. laws and regulations.
The company has faced regulatory scrutiny in several jurisdictions in recent months, and its CEO has previously been accused of violating anti-money laundering laws.
