Binance Used U.S. Banks to Move Billions, SEC Reveals

Binance Used U.S. Banks to Move Billions, SEC Reveals
Binance Used U.S. Banks to Move Billions, SEC Reveals by echotelegraph

Key Takeaways

  • The SEC reveals Binance’s use of two U.S. banks to move billions of dollars globally.
  • Binance officials, including CEO Changpeng Zhao, conducted rapid and substantial transfers through Silvergate Bank and Signature Bank.
  • The SEC estimates unpaid taxes of over $13 million by Binance over the past four years.
  • Binance is facing an SEC lawsuit for mishandling customer funds, providing false information, and engaging in manipulative trading.
  • Assets tied to Binance’s U.S. subsidiary may be temporarily frozen.
  • Binance denies wrongdoing and pledges to vigorously defend itself.
  • Concerns of potential money laundering and fraud arise from the large and rapid transfers.
  • The involvement of Silvergate Bank and Signature Bank raises questions about their compliance and oversight.
  • The case highlights the need for stricter regulation and enhanced compliance measures in the cryptocurrency industry.

The Securities and Exchange Commission (SEC) has released new details regarding Binance’s utilization of two American banks to transfer substantial amounts of funds globally. The court filings reveal the flow of billions of dollars in and out of accounts associated with Binance within short time frames.

Transactions through Silvergate Bank and Signature Bank

The SEC’s accountant, Sachin Verma, provided a breakdown of the complex transactions made by entities connected to Binance through two banks: Silvergate Bank and Signature Bank. These transactions involved Binance officials, including CEO Changpeng Zhao, moving hundreds of millions and sometimes billions of dollars to accounts associated with companies in Kazakhstan, Lithuania, and the Seychelles.

  • In February 2022, $20 million entered a Silvergate account and $19.9 million flowed out within a few days, leaving the account with a starting balance of $7.6 million at the beginning of the month and $7.7 million at the month’s end.
  • A Binance account at Signature Bank reported $1 billion in deposits and $1.3 billion in withdrawals within the same month.

Unpaid Taxes and SEC Lawsuit

The SEC estimated that Binance owes more than $13 million in interest penalties for unpaid taxes over the past four years. Although the exact amount of taxes paid by Binance or the owed amount were not disclosed, the SEC stated that Binance earned nearly $225 million between 2019 and 2023. The SEC recently sued Binance, accusing the company of mishandling customer funds, providing false information to regulators and investors, and engaging in manipulative trading.

Freeze of Assets and Lawsuit against Changpeng Zhao 

U.S. regulators have requested a temporary freeze on assets tied to Binance’s subsidiary in the United States. The SEC has also filed a lawsuit against Binance CEO Changpeng Zhao, alleging that he orchestrated the movement of billions of dollars to an offshore entity under his control.

Binance’s Response

Binance denies any wrongdoing and states that the transactions mentioned in the filings did not involve customer funds. The company asserts that the transfers of funds to various locations worldwide were conducted as part of its normal business operations. Binance has pledged to “vigorously” defend itself against the SEC’s allegations.

Money Laundering Concerns and Suspicious Activity Reports (SARs)

Anti-money laundering experts suggest that the large and rapid transfers conducted by Binance should have raised concerns among bankers. Banks are required to file suspicious activity reports (SARs) when they suspect transactions involve money laundering or fraud.

Involvement of Silvergate Bank and Signature Bank

The filings do not indicate whether Silvergate Bank or Signature Bank reported Binance’s activities to the authorities. Silvergate Bank voluntarily liquidated itself in early March due to significant losses from cryptocurrency customers, while Signature Bank was taken over by the Federal Deposit Insurance Corporation and the New York State Department of Financial Services.

About Signature Bank

Signature Bank, headquartered in New York, had approximately $100 billion in assets and operated 40 branches in the United States. In 2018, the bank received approval from the New York regulator to accept deposits from crypto trading customers through its specialized digital payments platform, Signet.

Regulatory Concerns and Industry Implications

The case involving Binance’s use of U.S. banks to move funds highlights concerns among regulators and experts regarding potential money laundering and fraudulent activities in the cryptocurrency industry. The revelations call for stricter oversight and enhanced compliance measures within the industry.

Overall, the SEC’s detailed account of Binance’s use of American banks sheds light on the intricate financial transactions conducted by the cryptocurrency exchange, raising significant legal and regulatory implications.


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NY DFS Press Release

NY DFS Internal Review Report on Signature Bank