Binance CEO Changpeng ‘CZ’ Zhao, and Guangying ‘Helina’ Chen, received billions of dollars of customer funds through their holding company, the Securities and Exchange Commission (SEC) alleged in a new court document.
The funds were sent to firms controlled by Zhao via an intermediary holding company known as Key Vision Development Limited, the SEC said.
The evidence for these allegations comes via testimony delivered by Sachin Verma, an accountant employed by the SEC, which will be used as part of the regulator's arguments to request the court to sign a temporary restraining order to freeze assets on Binance.US.
“The SEC has been unable to determine why a Zhao-controlled entity that was purportedly trading on the Binance.US Platform using Zhao’s personal funds would have acted as a 'pass through' account for billions of dollars of Binance Platforms customers’ funds,” the court filing reads.
The SEC alleges, via Verma’s forensic analysis of the bank statements of Binance and Zhao’s web of companies, that $12 billion was sent to Zhao and $162 million to a Guangying Chen-controlled company in Singapore.
Chen and Zhao controlled a number of companies with no obvious connection to Binance in their name, the documents show. The SEC says that the majority of the funds sent to Zhao and Chen are now in accounts “offshore.”
Binance has publicly denied mixing customer deposits and company funds, and has said that Merit Peak is a vehicle for CZ to trade his “self-made wealth.”
The SEC has been investigating Binance.US since at least 2020 and alleges that Binance held custody of its U.S. affiliate’s assets until December 2022, despite assuring regulators and the public they were separate entities.
Binance and the SEC have a court date set for June 13 regarding the restraining order.
Zhao said on Twitter that the allegation was "simply false."
In a statement, a Binance spokesperson said the referenced funds were "strictly corporate funds and not user assets."
"Binance’s top priority is protecting user assets, which are held 1:1. These accounts represent revenue received by the business for products provided and/or services rendered," the spokesperson said. "Like every other company across the globe, our revenue is used to cover the operational costs of running our global business. We are globally regulated in 17 countries worldwide and regularly have to optimize corporate account holdings. These types of transactions are typical of most global corporate entities and are required to ensure we are able to facilitate our products and services in a stable and compliant manner."
UPDATE (June 8, 2023, 17:37 UTC): Adds Binance statements.
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