Binance Commingled Customer Funds and Company Revenue, Former Insiders Say - Sla...
source link: https://news.slashdot.org/story/23/05/23/215221/binance-commingled-customer-funds-and-company-revenue-former-insiders-say
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Binance Commingled Customer Funds and Company Revenue, Former Insiders Say
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The money flows at Binance described by Reuters indicate a lack of internal controls to ensure customer funds were clearly identifiable and segregated from company revenues, three former U.S. regulators said. They said the commingling of these funds put client assets at risk by obscuring their whereabouts. Binance customers shouldn't "need a forensic accountant to find where their money is," said John Reed Stark, a former chief of the Securities and Exchange Commission's Office of Internet Enforcement. Reuters found no evidence that Binance client monies were lost or taken.
The commingling of customer and corporate funds can be a precursor to heavy losses for clients of financial firms. In December, the SEC and CFTC alleged that the founder of the collapsed FTX crypto exchange, Sam Bankman-Fried, for years had commingled client funds at his trading firm and used the monies to finance venture capital investments, political donations and real estate purchases. Bankman-Fried has pleaded not guilty to fraud charges and said he did not knowingly commingle any funds. In a statement to Reuters, Binance denied mixing customer deposits and company funds. "These accounts were not used to accept user deposits; they were used to facilitate user purchases" of crypto, said spokesperson Brad Jaffe.
"There was no commingling at any time because these are 100% corporate funds." When users sent money to the account, he said, they were not depositing funds but buying the exchange's bespoke dollar-linked crypto-token, BUSD. This process was "exactly the same thing as buying a product from Amazon," Jaffe said.
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