Explosive Report: Binance Shifts $400M from US Affiliate to Managed Company of CEO CZ

Bank records and internal company communications reveal that giant crypto exchange Binance had undisclosed access to a bank account belonging to its supposedly independent American partner.

The exchange then proceeded to transfer substantial amounts of money from the account to a trading firm managed by Binance's CEO, Changpeng Zhao.

During the first quarter of 2021, the Binance.US account held at Silvergate Bank in California saw over $400 million transferred to Merit Peak Ltd, as per the reviewed records for that period.

According to the same records, the Binance.US account was registered under BAM Trading, the exchange's operating company in the United States.

Transfers to Merit Peak began towards the end of 2020, as evidenced by company messages.

The reason for the large transfers and whether the money belonged to customers of Binance.US could not be determined.

The exchange's public terms of use, during that time, stated that customers' dollar deposits were held at Silvergate Bank and a custodian company in Nevada named Prime Trust LLC. According to the bank records, Prime Trust made wire transfer deposits totaling $650 million into the Binance.US account during that quarter.

Kimberly Soward, a spokesperson for Binance.US, did not address Reuters' inquiries regarding the bank records' detailed transfers. In a statement, she remarked that Reuters' reporting utilized "outdated information," without providing any further explanation.

Soward added that "Merit Peak is neither trading nor providing any kind of services on the Binance.US platform," and that only employees of Binance.US had access to the U.S. company's bank accounts. Soward did not specify when Merit Peak's activities ceased.

Moreover, Binance CEO Zhao, and Prime Trust did not provide responses to specific inquiries regarding the transfers. A representative from Silvergate bank mentioned that the institution refrains from commenting on individual customers.

Messages reviewed by Reuters indicate that Binance.US executives were apprehensive about the outflows, as the transfers were being conducted without their awareness.

In late 2020, Catherine Coley, the former CEO of Binance.US, sent a message to a Binance finance executive requesting an explanation for the transfers, referring to them as "unexpected" and mentioning that they had not been discussed earlier.

Reuters could not track the whereabouts of the $400 million. As per an individual with first-hand knowledge of the transfers, a portion of the sum was sent to the Silvergate account of a Seychelles-based firm known as Key Vision Development Limited.

In a 2021 corporate filing by a different Binance entity, CEO Zhao was identified as a director of Key Vision. A former executive from Silvergate verified that Key Vision had an account at the bank during that period.