Benzinga - High-ranking Binance executive Guangying Chen, a trusted ally of Binance CEO Changpeng Zhao, was the principal controller of five bank accounts associated with the supposedly autonomous U.S. subsidiary of the colossal crypto exchange, Binance.US, according to disclosed bank records.
Among these accounts, one contained funds belonging to American clients, Reuters reported.
These accounts, under the stewardship of Chen, were approved by U.S. financial institution Silvergate Bank (NYSE: SI) in 2019 and 2020, the documents from these periods revealed.
Consequently, Chen and her subordinates were given the authorization to mobilize funds in these bank accounts.
To execute payments, even for payroll, the staff of the U.S. arm, Binance.US, had to approach Chen's team.
Previously undisclosed bank records and communications depict the extent of this clandestine control exerted by Binance over its U.S. arm's financial operations, particularly regarding its Silvergate bank accounts.
However, Binance.US rebuffs claims of Binance ever controlling its bank accounts.
The company's legal head, Krishna Juvvadi, told Reuters in April that since its inception in 2019, BAM Trading, the operator of Binance.US, had exclusive control.
In a recent response, Binance.US spokesperson Christian Hertenstein, stated that only Binance.US officials have had control or access to Binance.US accounts since the current CEO Brian Shroder assumed office in late 2021. The differing timelines given by Juvvadi and Hertenstein went unexplained.
Benzinga has independently reached out to Binance for a comment.
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The report further states that Zhao covertly maintained financial control over Binance.US, directing its expansion into the substantial American crypto market while keeping it distinct from his global exchange, which has attracted regulatory attention from the U.S.
Binance and Zhao were accused of deliberate evasion of commodities laws by the U.S. Commodity Futures Trading Commission in March, allegedly through "intentional structuring of entities" to circumvent U.S. regulations meant to safeguard investors.
Zhao denounced these civil charges as a "partial representation of facts."
In 2021, it was reported that over $400 million was transferred from a Binance.US Silvergate account, managed by a Chen deputy, to a Zhao-controlled trading company, Merit Peak.
Binance.US, however, claimed that Merit Peak was merely withdrawing its funds, derived from its exchange trading activity.
A Binance.US investigation into the previous allegations found them "entirely false," according to Juvvadi.
Binance was also accused of blending customer funds with its corporate revenues in Merit Peak's Silvergate account, contravening U.S. financial regulations mandating separate client funds.
This accusation was vehemently denied by Binance.
Guangying Chen, also known as Heina, took on the role of "Primary Admin User" for the five bank accounts as per agreements with Silvergate Bank, with bank records dating between December 2019 and January 2020 backing this claim.
Binance.US was not in control of its financial affairs due to this arrangement.
Binance.US continued to assert its independence and autonomy from Binance, stating that any issues related to Chen's role, her control over the accounts, and when it might have ended are "difficult to address in their entirety" due to a complete change in the management team since the period in question.
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