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  • Writer's pictureDavid Manion

How Binance Moved $400 Million To CZ Owned Trading Firm

According to a recent report from Reuters, crypto exchange Binance moved $400 million from a “secret” account linked to its U.S. subsidiary, Binance.US, in 2021. The funds were allegedly sent to a trading firm owned by the crypto exchange’s CEO, Changpeng “CZ” Zhao.

According to the report, the trading firm is called Merit Peak and is supposedly managed by CZ. The firm was incorporated in the British Virgin Islands in 2019 when the firm invested $1 million into the recently created Binance subsidiary Binance.US.

Where Are The Binance Funds Coming From?

The transactions from Binance.US accounts into Merit Peak began in late 2020, and by 2021 the trading firm received over $400 million. The entities used the crypto-friendly bank Silvergate and its Silvergate Exchange Network (SEN) for the transactions.

Reuters could not provide a reason for these transactions, but they allegedly established a link between Binance, Merit Peak, two entities run by CZ, and Binance.US. The crypto exchange and its top executives often highlight that the U.S. company operates independently from the international entity, Binance.

This report attempts to show that this perception is not only false but that these entities are intertwined on a financial level. Catherine Coley, former CEO of Binance.US until 2021, was aware of these transactions and, according to messages reviewed by Reuters, demanded Binance executives for explanations on the “unexpected” transfer.

Coley also inquired about the origins of the funds, saying “no one mentioned them” to the Binance.US staff. According to the report, the transactions between the entities hint at Binance international having control over the U.S. subsidiary’s finances.

This status quo goes as far as Binance.US staff having to request access and clearance to approve payments from top Binance finance executives. The U.S. crypto company operates under a technology architecture, Reuters claims, called “BlackBox.”

The name of this architecture comes from its secretive functionality for Binance.US employees. Thus, Binance could be running its business with a conflict of interest between the exchanges and the trading firm.

A Binance.US spokesperson cited by Reuters, Kimberly Soward, denied the report and claimed it is based on “outdated information.” Soward said the following claiming that only Binance.US have access to this exchange’s account:

Merit Peak is neither trading nor providing any kind of services on the Binance.US platform.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


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