Binance.US sent $400M to a partner firm managed by CZ

Binance.US sent approximately $404 million to a firm managed by Binance CEO Changpeng Zhao, according to a Feb. 16 report from Reuters.

That report alleges that Binance.US, under the name BAM Trading, sent millions of dollars from an account at Silvergate Bank to a trading firm called Merit Peak Ltd.

Merit Peak names Binance CEO Changpeng Zhao as its manager. Binance and Binance.US have been required to operate separately since 2019. As such, the above transactions imply that Zhao has a possibly inappropriate financial connection to Binance.US.

Reuters went as far as to suggest that the transactions imply that Binance controls the finances of Binance.US. It also said that Merit Peak was a dealer on Binance.US and, citing regulators, said that lack of public disclosure on the matter created a conflict of interest. Reuters was, however, unable to find the reason behind the transfers and was unable to determine whether the transferred funds belonged to exchange customers.

The transfers took place in late 2020 and the first quarter of 2021. Around that time, Catherine Coley, who formerly served as Binance.US’ CEO, suddenly left the company and went dark on social media. Reuters said today that Coley noticed the unusual transactions and questioned other Binance.US staff on the matter before leaving the firm.

Reuters obtained its information from Binance.US’s private bank records and messages. Binance.US did not comment on the transactions but told Reuters that it had accessed “outdated information.” Binance.US told Reuters that Merit Peak is not using its trading services. Reuters said Merit Peak’s activities ceased at an unknown date.

The connection between Binance.US and Merit Peak has attracted attention since February 2022, when it was reported that the U.S. SEC was investigating the exchange’s various partners. That report says that the SEC first subpoenaed Binance.US in 2020.