Binance Debunks Commingling Users Funds Report

May 24, 2023

MCP News Free

Binance Debunks Commingling Users Funds Report

Key Point

Reports about Binance mixing users funds is an attempt to spread “negativity” about Binance, says a Binance exec

Reports from multiple sources suggested that the world’s largest cryptocurrency exchange allegedly “commingled” users’ funds with the exchange revenue in 2020 and 2021, respectively.

However, Binance executive Patrick Hillmann who is Binance’s Chief Communication Officer, has debunked the allegation, noting that it is an attempt by popular news agencies to spread “negativity” about Binance.

According to Hillmann, the report was based on the fact that when users buy BinanceUSD from Binance, they are taken to a transactional page with the term “deposit” on it.

“This story is so weak that they had to put up front, Reuters found no evidence that Binance client monies were lost or taken in a transparent attempt to protect themselves from a libel suit,” Hillmann tweeted.

To recap, Reuters and some news agencies had reported that a source from Binance’s finance department said that Binance usually commingles customers’ funds with corporate funds daily in the exchange account held in the pro-crypto bank Silvergate Bank. However, the news agencies didn’t reveal the entire amount that was mixed; but there was a mention of a review of bank records that shows that on February 10, 2021, Binance mixed $20 million company’s funds with $15 million, which is clients’ money.

Meanwhile, US regulations require that the customers’ funds be separated from corporate funds; by this, Binance will be guilty of violating financial laws in the US, should the report be accurate.

Binance is currently under scrutiny by the US financial regulators; earlier this year, the exchange was sued for violating commodities laws, and the US justice department is also probing the exchange for alleged violation of Russian sanctions; therefore, a Reuters report about comingling of funds is like adding salt to Binance’s wound which has already been looking to exit the US market because of the sour regulatory environment recently created by regulators.

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