The US partner of global cryptocurrency exchange Binance has confirmed that a trading firm managed by Binance CEO Changpeng Zhao acts as a market maker on its platform.
Reuters gave this information on Thursday binance The independent US partner allegedly had covert access to a bank account and transferred large sums of money from the account to the trading firm, Merritt Peak.
“Whereas there was a market making firm called Merit Peak which binance.us platform, it halted all activity on the platform in 2021,” Binance.US said in a do after the Reuters story was published on Thursday. It did not elaborate on when the activity ceased in 2021, or comment on Zhao’s role at the trading firm.
The global Binance exchange is not licensed to operate in the United States, but Merit Peak’s transfer revealed by Reuters suggests Binance has publicly stated that the US entity is “fully independent”. is and “its” US partner.
Binance transferred more than $400 million (roughly Rs. 3,310 crores) from an account at California-based Silvergate Bank between January and March 2021, Reuters reported on Thursday.
before this StoryAs of publication, Binance.US told Reuters that “Merit Peak is neither trading nor providing any kind of services on the Binance.US platform,” without providing further details.
According to messages reviewed by Reuters, Binance.US officials were concerned about the outflow of Merit Peak from the Silvergate account because the transfers were happening without their knowledge.
A spokesperson for the global Binance exchange, who did not respond to Reuters questions for the article on Thursday, told crypto news outlet CoinDesk that the transfer was “a Binance.US issue.”
activities of crypto The platform’s market makers – companies that typically buy and sell assets on exchanges to deepen trading volumes – have come under increased scrutiny from US financial regulators since the collapse of the major exchange. ftx in November.
‘tremendous burden’
Zhao has not directly addressed the report, but on Friday he Tweeted“Remember 4,” tagging a previous post in which he listed his “do’s and don’ts” for 2023. The fourth item on the list was “FUD, fake news, ignore attacks” using an acronym for “fear, uncertainty” and doubt” often used in crypto to refer to news perceived as negative. happens in relation.
A day before the Reuters article, Binance chief strategy officer Patrick Hillman told The Wall Street Journal and Bloomberg that Binance is expected to pay the fine in order to resolve the US investigation into the company. Hillman said Binance was built by software engineers unfamiliar with the laws and regulations on bribery and corruption, money laundering and economic sanctions, but previously closed “gaps” in its regulatory compliance.
“It’s a tremendous burden,” Hillman told Bloomberg. “We just want to put this behind us.”
Hillman did not respond to detailed questions sent by Reuters for the article published on Thursday.
Regulators are concerned that some market makers have received undisclosed special treatment from crypto exchanges that could harm customers.
The US Securities and Exchange Commission in December accused FTX founder Sam Bankman-Fried of granting “special privileges” to his trading firm Alameda Research, allowing them to launder billions of dollars in FTX customers’ money. Bankman-Fried has not admitted his guilt.
The bankruptcy of a series of major crypto firms in 2022 has also led to calls for greater clarity from politicians on how regulators assess the relationship between US banking and the cryptocurrency sector.
In December, US senators Elizabeth Warren and Tina Smith wrote to top financial regulators, including US Federal Reserve Chairman Jerome Powell, asking for their assessments of the risks to banks and the banking system stemming from exposure to crypto. The letter cited Silvergate Capital Corp as one of the banks that “were heavily dependent on their crypto customers.”
Shares in Silvergate Capital Corp, the parent company of Silvergate Bank, fell sharply on the Reuters report, plunging more than 22 percent. They have lost nearly 90 percent of their value since hitting an all-time high in November 2021.
© Thomson Reuters 2023