- The SEC has accused Binance of directing customer funds to firms owned by Binance founder ‘CZ’.
- The majority of the funds (which amounted to roughly $12bn) were allegedly sent to CZ-owned investment firm called Merit Peak.
- The claim also alleges that Binance and Binance US are not as distinct from each other as the exchange suggests.
As part of the Securities and Exchange Commission’s (SEC) lawsuit against Binance, the regulator has accused the largest crypto exchange in the world of redirecting some $12bn worth of customer funds through investment entities controlled by Binance founder ‘CZ’. Binance US has also now announced that it will be pausing USD deposits for an undefined period of time.
Reportedly, most of the funds were sent to a fund called Merit Peak, which is a firm owned by Binance founder Changpeng Zhao (CZ). It is alleged that most of Merit Peaks funds were then transferred to an affiliate of Paxos – the issuer of Binance’s stablecoin BUSD. In addition, the suit also claims that there is little distinction between Binance and its US entity Binance US, as the latter’s funds were being held by the former. Binance will now be on the defensive to combat these allegations, and to restore confidence in its native token BNB – which has fallen 15.5% over the past week.
BNB, or Binance Coin, is a cryptocurrency that was created by the popular cryptocurrency exchange called Binance. It was initially launched as an ERC-20 token on the Ethereum blockchain but later migrated to its own blockchain called Binance Chain. BNB serves multiple purposes within the Binance ecosystem. Firstly, it is used as the native cryptocurrency on the Binance exchange, allowing users to pay for trading fees and participate in token sales hosted on the platform. By using BNB to pay for fees, users can enjoy discounts and other benefits, making it a popular choice for frequent traders. BNB has been integrated into various applications and services, including decentralized finance (DeFi) platforms, where users can stake or lend their BNB to earn rewards. BNB has also found use in Binance Launchpad, which hosts token sales and initial coin offerings (ICOs) for new projects.