According to a Reuters report on Tuesday, Binance, the world’s largest cryptocurrency exchange, mixed billions of dollars’ worth of customer assets with its corporate revenue in 2020 and 2021, concealing the location of their money. Binance’s Chief Communications Officer, Patrick Hillmann, responded by calling the story “weak” and xenophobic but acknowledged the company’s past “regulatory shortcomings.”
Reuters’ Allegations
The original report cited multiple anonymous sources familiar with the matter, one of whom had “direct knowledge of Binance’s group finances.” The source claimed that co-mingling occurred “almost daily” in accounts Binance held with Silvergate, a crypto-supportive bank that has been investigated for aiding the bankrupt FTX exchange with co-mingling funds with Alameda Research. Binance stated to Reuters that none of the funds within its Silvergate accounts were “customer deposits,” but rather they were utilized to buy BUSD, Binance’s native dollar-pegged stablecoin.
However, the exchange’s website categorized dollar transfers to its platform as “deposits” that would be “credited” to their accounts as BUSD during 2021, which might lead to confusion about regulatory safeguards regarding those transfers.
Paxos, the issuer behind BUSD, was forced to stop issuing new stablecoin tokens in February after receiving a Wells Notice from US regulators.
Binance’s Reaction
In a tweet on Tuesday, Binance’s Hillman claimed that customers were explicitly informed on the website that their “deposits” would be used to purchase BUSD. The communications officer also criticized Reuters’ qualifying statement that it found “no proof” Binance clients lost any money, which he believed was a “transparent attempt to protect themselves from a libel suit.”
“We’ve been very public about where the company had regulatory shortcomings in the past; there’s no reason for a respected news outlet like Reuters to keep making things up,” he stated.
Hillman also suggested that Reuters had implicit “xenophobia” for regularly mentioning CEO Changpeng Zhao’s Chinese ethnicity. The executive has stated previously that Binance is not a Chinese company and that he has been a Canadian citizen since the age of 12.
