Binance, a major cryptocurrency exchange, secretly gained access to a bank account belonging to an ostensibly independent US partner and transferred sizable sums of money from the account to a trading company run by Binance CEO Changpeng Zhao.More than $400 million was transferred from the Binance.US account at California’s Silvergate Bank to this trading company, Merit Peak Ltd., during the first three months of 2021, according to records for the quarter, which were reviewed by Reuters.The Securities and Exchange Commission is investigating the relationships between the U.S. division of Binance and two trading companies with ties to the company’s founder. Sigma Chain and Merit Peak are the two companies, and they act as “market makers” on Binance’s US exchange. It is speculated that the US congress may get involved in this. Let’s explore. Senator Marshall says US Congress may hold an inquiry into BinanceA senator was quoted by Reuters on February 17 as saying that the U.S. Congress should conduct an investigation of Binance.US because of its affiliation with Merit Peak.Senator Roger Marshall told the publication, “Something fishy is going on here that clearly doesn’t pass the smell test…Congress needs answers, and Binance.US and Silvergate are obligated to give them to us.” Since that report, Binance.US has publicly stated on Twitter that Merit Peak operated on its platform but “stopped all activity on [Binance.US] in 2021.”Although Binance.US provided Reuters with a similar remark in private earlier, it also elaborated on that position in a public Twitter post. It stated that the only people with access to firm bank accounts are employees of Binance.US. Additionally, it stated that Merit Peak and other external market makers must compete honestly and openly for discounts.Binance US further stated that it would never exchange or lend out consumer funds. The firm expressed its distaste for high-profile business failures brought on by fund intermingling, probably referring to FTX and Alameda Research’s demise.There have been many attempts to draw parallels between and fraudulent exchanges that have gone bankrupt. The real facts speak for themselves: there is no comparison. Our leadership team is staffed with former DOJ, SEC, FBI, and NYFed employees who are… Binance.US 🇺🇸 (@BinanceUS) February 16, 2023 Binance Expects to Pay Penalties to Resolve U.S. Investigations Binance, the world’s largest cryptocurrency exchange, plans to pay monetary penalties to settle existing U.S. regulatory and law-enforcement investigations into its operations, according to the company’s chief strategy officer in an interview.According to Mr. Hillmann, the business is “working with regulators to figure out what are the remediations we have to go through now to make amends for that.” The outcome will “likely be fine, could be more.… We just don’t know. That is for regulators to decide.”Do you believe that this is a significant enough issue to get Congress’s attention and prompt them to take action against Binance? Is Binance engaging in illegality as the senator suspects?
