Binance is on the radar after $400 million was transferred from its US branch to an entity managed by Changpeng Zhao in early 2021.
Binance US linked with Merit Peak
Changpeng Zhao, also known as CZ, is the CEO of Binance. The trade of him has been under the microscope in recent months.
The forensic investigation of Reuters, an established news site, now shows that, two years ago, $400 million was transferred via Silvergate Bank, a crypto bank that is also one of Binance’s partners, to Merit Peak, a trading firm that lists Changpeng Zhao as a “manager.”
Merit Peak is incorporated in the British Virgin Islands.
In the first three months of 2021, the researchers established that although $400 million moved through Silvergate Bank from Binance US, registered under BAM Trading; it could not be independently verified whether they included customer funds.
This is because, during that time, the Binance.US account received $1.3 billion from corporate clients.
Binance responds
Reuters was also unable to establish the reason for the transfer. The only detail found was that Merit Peak “facilitated trading” for Binance.US. It means that they are market makers, which helps make cryptocurrency trading and transactions more liquid.
Merit Peak benefits from spreads, the difference between the bid and ask prices of the underlying assets, as long as they offer these services. The problem is that Reuters found that Binance.US employees did not know exactly how Merit Peak ran its trades.
The Reuters investigation questions whether Binance.US is independent as it claims. Based on these findings, the news outlet suggests that although Binance Global is not licensed to operate in the United States, it could directly control the finances of the US-based branch.
In addition, transfers were made without informing the executives. For example, the massive $400 million transfer caught then-CEO Catherine Coley by surprise.
Binance responded to inquiries from Reuters. A representative said that the information sought was out of date and that Merit Peak does not provide services to the Binance.US platform.