The world’s largest cryptocurrency exchange, Binance, commingled customer funds with company revenue in 2020 and 2021, in breach of U.S. financial rules that require customer money to be kept separate, Reuters reported. The sums ran into billions of dollars and commingling happened almost daily in accounts the exchange held at U.S. lender Silvergate Bank. Reuters couldn’t independently verify the figures or the frequency, but the news agency reviewed a bank record showing that on Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer money. The money flows at Binance indicate a lack of internal controls to ensure customer funds were clearly identifiable and segregated from company revenues. The commingling of these funds put client assets at risk by obscuring their whereabouts. Binance customers shouldn’t “need a forensic accountant to find where their money is,” said John Reed Stark, a former chief of the Securities and Exchange Commission’s Office of Internet Enforcement. Reuters found no evidence that Binance client monies were lost or taken. SEC chair Gary Gensler has said that many crypto exchanges offering securities to U.S. customers are not complying with laws requiring registered broker-dealers to safeguard client money by separating it from corporate assets. “Their business models tend to be built on taking customer funds, commingling it,” he said. The SEC has launched a crackdown on a string of crypto firms, but has not targeted Binance with any direct enforcement action. Binance allowed U.S. customers to trade on its platform from 2019 to this year despite publicly claiming to restrict access to Americans, the U.S. Commodity Futures Trading Commission alleged in a complaint against the exchange in March.
