Amidst the Securities and Exchange Commission’s lawsuit against Binance, several significant revelations have emerged. As the world’s largest exchange prepares to confront the SEC in a legal battle, it faces additional challenges. Recently, it has come to light that Binance and its associated entities moved approximately $70 billion through accounts at Silvergate Bank and Signature Bank. Both of these banks are now defunct.
According to a 27-page document filed in US District Court in Washington, Silvergate Bank facilitated over $50 billion in deposits for parties associated with Binance. Signature Bank, on the other hand, handled more than $19 billion. The filing further reveals that a review of financial records, including bank statements, deposits, canceled checks, and wire transfers, indicates that some of these funds flowed out to foreign entities. These substantial transactions between these accounts are from 2019 until the present year.
The filing suggests that both Binance and its CEO, Changpeng Zhao, have conducted significant financial transactions involving hundreds of millions, and in certain instances, billions of dollars. These transactions were facilitated through regional banks and directed to accounts associated with companies located in various locations such as Kazakhstan, Lithuania, and the Seychelles.
This wasn’t all. The documents further reveal that a Binance account held at Signature Bank reported $1 billion in deposits and $1.3 billion in withdrawals within a single month. These substantial amounts of outgoing funds were directed toward Merit Peak, a company controlled by CZ. The SEC alleges that customer funds were illicitly mixed or combined with these funds within Merit Peak. This potentially indicates the commingling of funds.
Binance and its “red flags”
Louise Shelley, a George Mason University professor specializing in money laundering, commented on the magnitude of the situation. She further said,
“It is one of the more sizable cases of financial misconduct I’ve ever seen — the documentation is overwhelming. This is just so mammoth and should be raising red flags.”
Furthermore, the SEC has estimated that Binance, in the last four years, has unpaid taxes. This carries an interest penalty exceeding $13 million. The SEC also provided an estimate that Binance earned nearly $225 million between the years 2019 and 2023. However, the regulator did not disclose the exact amount Binance paid in taxes during this period. The specific amount it should have paid was also under wraps.
It looks like the SEC has been doing a lot of digging. Binance is likely to be hit with more allegations.