Binance used two American banks to move billions of dollars, says SEC

Emily Flitter & Matthew Goldstein

8 June

Binance, the giant cryptocurrency exchange accused of mishandling customer funds, used two American banks to move billions of dollars around the world, the Securities and Exchange Commission said on Wednesday, detailing how huge sums of cash flowed in and out of the accounts sometimes within a span of days.

In court filings, the SEC accountant, Sachin Verma, detailed a tangle of transactions that companies associated with the giant cryptocurrency exchange had made through two banks: Silvergate Bank and Signature Bank, both of which failed this year.

The filing showed that Binance officials, including the company’s founder and chief executive Changpeng Zhao, moved hundreds of millions and in some cases billions of dollars through the regional banks to accounts associated with companies in places like Kazakhstan, Lithuania and the Seychelles.

The SEC separately said it estimated unpaid taxes by Binance over the past four years carried an interest penalty of more than $13 million. Though it estimated that Binance earned almost $225 million from 2019 to 2023, the regulator didn’t say how much the company paid in taxes over the period, or how much it should have paid.

This week, the SEC sued Binance in federal court in Washington,  accusing the company of mishandling customer funds, lying to regulators and investors about its operations and engaging in manipulative trading. US regulators have asked a federal judge to temporarily freeze assets tied to Binance’s subsidiary in the United States, and Wednesday’s filing was in support of that request.

The SEC also has sued Zhao claiming he was the architect of the plan to move billions of dollars to an offshore entity that he controlled.

A Binance spokesman said that the transactions detailed in the filings did not involve customer money and that the transfers of funds to various locations around the world were carried out as part of the normal course of Binance’s business operations.

Binance has denied wrongdoing and vowed to “vigorously” defend itself in the SEC case. Although Wednesday’s filings did not offer an explicit theory for why Binance’s leaders moved money this way, anti-money laundering experts said the large, rapid transfers should have raised red flags for bankers. Banks are required to file with federal regulators a suspicious activity report,  in case of suspected fraud.