Changpeng Zhao, the CEO of Binance, has strongly refuted claims that the cryptocurrency exchange redirected approximately $12 billion of user funds to companies under his control. These assertions arose following reports suggesting that CZ had transferred customer funds to a firm called Merit Peak. The situation intensified when US Senators Elizabeth Warren and Chris Van Hollen called upon the US Justice Department to investigate Binance following a complaint from the US Securities and Exchange Commission (SEC).
Binance CEO Provides Clarity On User Funds
Expressing his uncertainty about the accuracy of the claims, CZ took to Twitter, suggesting that the misinformation may have originated either from the journalist or the source of the information. This response underlined the CEO’s commitment to transparency and accountability.
CoinDesk published an article on June 8, revealing allegations made by the SEC against CZ and Guangying ‘Helena’ Chen, accusing them of receiving billions of dollars in customer funds through their holding company; the SEC asserted that the funds were transferred to companies controlled by Zhao using an intermediary holding company named Key Vision Development Limited.
Supporting these allegations, the SEC presented testimony from Sachin Verma, an accountant employed by the regulatory body, which will serve as evidence in their request for a temporary restraining order to freeze assets on Binance.US.
According to the lawsuit filed by the SEC, Binance is accused of participating in the sale and offering of securities without proper registration. Additionally, the company allegedly has mixed investor funds with its own funds. Interestingly, this lawsuit came on the heels of a similar case involving Coinbase and the SEC.
Binance.US has reported that the total amount of user funds on the platform is currently estimated to be around $2 billion in USD equivalent, subject to fluctuations due to changes in cryptocurrency prices. However, the company has acknowledged a decline in user funds as some individuals have opted to withdraw their assets due to the recent news.
The legal battle is set to unfold in court, with a hearing scheduled for June 13 to address the SEC’s request for a restraining order. The outcome of this hearing will play a crucial role in determining the next course of action and whether the court will grant the SEC’s plea to freeze assets associated with Binance. The hearing’s verdict will illuminate the veracity of the SEC’s allegations and the potential impact on Binance’s operations.
Amidst the ongoing case, CZ remains active on his Twitter account, engaging with users, responding to comments, and sharing updates regarding the platform. This proactive approach aims to maintain open lines of communication with Binance’s user base.
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