Binance Denies Commingling ‘Billions’ in Customer Funds

Three unnamed sources say Binance, the world’s largest cryptocurrency exchange, will mix billions in customer funds in 2020 and 2021, according to a new report from Reuters.

The article cites interviews with three anonymous sources, one of whom claims to have direct knowledge of the Binance group’s finances, according to Reuters. The insider said that Binance used the now defunct Silvergate Bank to mix billions of dollars almost every day.

This is not the first time Reuters published incriminating reports about Binance. In the past, it claimed the company was involved in money laundering and irregular money transfers. And as with the last reports, Binance is strong in its denials of the claims.

Patrick Hillman, Binance’s chief communications officer, said on Twitter that the details in today’s report are not true.

“We have gone public with the company’s regulatory deficiencies in the past,” he wrote, “no reason for a respected outlet like Reuters to keep making things.”

Binance did not immediately respond to a request for comment from Decrypt.

For its part, the news outlet noted that they could not independently verify the numbers or frequency of transactions. It also said it found no evidence that Binance lost the supposed mixed funds.

According to the report, Binance’s stablecoin, Binance USD (BUSD), is at the center of the controversy. Allegations in the report say that BUSD was used to credit customers’ accounts when they actually deposited US dollars.

BUSD, which was previously issued and backed by reserves held by New York-based company Paxos, has not been held since the SEC sent the company a notice to Wells warning it intended to pursue litigation over of this “violation of investor protection laws” in February. As of this writing, BUSD has a market capitalization of $5 billion, according to CoinGecko—down from $16 billion the day Paxos said it would stop producing the stablecoin.

Three former US regulators were quoted in today’s report, saying that the threat that exists is that customers have no way of knowing where their funds are, putting their capital and assets at risk.

Binance customers don’t necessarily “need a forensic accountant to figure out where their money is,” John Reed Starka former head of the SEC’s enforcement team, told the news outlet.