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SEC alleges Binance sent nearly $20B in mixed funds via Merit Peak to Paxos in 2021

The US Securities and Exchange Commission (SEC) alleged that Binance sent approximately $20 billion in mixed funds to an overseas affiliate of stablecoin issuer Paxos in 2021. Announcement Done by Sachin Verma, Assistant Chief Accountant of the Commission.

In a June 7 court filing, Verma said that Binance and its CEO Changpeng Zhao controlled multiple accounts at the defunct SilverGate and Signature banks, which were used to conduct various transactions involving companies owned by Zhao.

merit peak

The announcement alleges that Binance.US, under the name BAM Trading, and several other Binance-affiliated accounts sent millions of dollars from Silvergate Bank accounts to a trading firm called Merit Peak Ltd.

Merritt Peak is a British Virgin Islands company owned by Zhao. The filing described the nature of its business as an OTC desk and proprietary trading of digital assets, with Silvergate closing its account in mid-2022.

Nearly $20 billion sent to Paxos overseas affiliate

Before closing the account, Verma said that “millions of dollars were received from accounts belonging to Binance in accounts belonging to Merit Peak” and subsequently transferred to an overseas affiliate of the stablecoin issuer, Paxos. The officer said:

“For example, in 2021, funds from Key Vision ($11.05 billion), Prime Trust ($1.1 billion) (via BAM Trading) and Bifinity UAB ($6.3 billion) (via Binance Holdings Ltd.) will merit Peake and Merritt transferred Peake about $20 billion of that money to a foreign affiliate of Paxos in 2021.

A closer look at account transactions between 2019 and 2021 reveals that Merit Peak received $22 billion from multiple Binance-affiliated accounts, including $1.2 billion from Binance US. During this period, the trading firm transferred $21.6 billion to this overseas affiliate of Paxos.

The announcement confirms previous reports that Binance had mixed users’ funds with Silvergate Bank’s bank accounts.

Binance has consistently said the report was false, but has yet to respond cryptoslate Request for additional comment as of press time.

Meanwhile, Paxos is the issuer of the Binance USD (BUSD) stablecoin. In February, New York regulators ordered the stablecoin issuer to stop further minting of BUSD. Binance and Paxos have also rejected the SEC’s classification of BUSD as a security.

Paxos didn’t respond cryptoslate Request for comment as of press time.

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