According to a recent court document, the Securities and Exchange Commission (SEC) has accused Binance CEO Changpeng ‘CZ’ Zhao and Guangying ‘Helina’ Chen of directing billions of dollars in customer funds to their firm Merit Peak. This was allegedly carried out through a holding company called Key Vision Development Limited. The SEC claims that Zhao and Chen received the customer funds through their holding company.
The Securities and Exchange Commission (SEC) has stated that the funds were transferred to companies under the control of Zhao through an intermediary holding company called Key Vision Development Limited.
These allegations are supported by testimony provided by Sachin Verma, an accountant working for the SEC. The SEC intends to present this evidence as part of their argument to obtain a temporary restraining order freezing assets on Binance.US.
According to the court filing, the SEC has expressed its inability to ascertain the reason behind a Zhao-controlled entity, which was supposedly utilizing Zhao’s personal funds to trade on the Binance.US platform, acting as an intermediary account for billions of dollars belonging to this cryptocurrency exchange Platforms customers.
The SEC’s allegations, supported by Verma’s forensic analysis of bank statements belonging to this cryptocurrency exchange and Zhao’s network of companies, claim that $12 billion was directed to Zhao, while $162 million was sent to a company controlled by Guangying Chen in Singapore.
According to the documents, Chen and Zhao were in control of multiple companies that did not have apparent links to this cryptocurrency exchange in their names. The SEC claims that a significant portion of the funds transferred to Zhao and Chen are currently held in offshore accounts. Chen serves as Binance’s back office and financial manager.
In a contradictory revelation, a recent report stated that she had control over accounts belonging to Binance.US, contradicting the presumed independence of the unit. Binance has publicly refuted any commingling of customer deposits and company funds, asserting that Merit Peak is merely a platform for Zhao to engage in trading using his personal wealth.
Binance CEO Responds to Scrutiny
According to a blog post and statement by the CEO, the platform expressed its strong intention to vigorously defend itself against the allegations. Binance emphasized that since it is not a U.S.-based exchange, the reach of the SEC’s actions is limited. The platform reassured users that all their assets on and its affiliate platforms, including Binance.US, are safe and secure.
Binance stated that it had been actively cooperating with the SEC since the beginning and respectfully disagrees with the agency’s allegations. This cryptocurrency exchange had been attempting to find a reasonable resolution with the SEC, but the agency, at the last minute, issued new requests and resorted to legal action. Binance suggested that the SEC’s actions seemed to be an attempt to assert jurisdiction over the platform, possibly encroaching on the territory of other regulators.
Binance.US, which is ultimately controlled by Zhao, expressed its disagreement with the lawsuit in a tweet, asserting that it is unjustified based on the facts, the law, and the Commission’s own precedent.