The Binance.US Platform Confirms that the Trading Firm of Binance's CEO Acted as a Market Maker‍.

Binance.US, the U.S. affiliate of the global cryptocurrency exchange Binance, has revealed that a trading firm run by Binance CEO Changpeng Zhao acted as a market maker on its platform. This discovery came after Trade Algo revealed on Thursday, citing banking records and business messaging, that Binance had hidden access to a bank account belonging to its independent U.S. partner and moved substantial quantities of money from the account to the trading firm, Merit Peak Ltd. Merit Peak ceased all activities on the Binance.US platform in 2021. However, the disclosures indicate that Binance controlled Binance's funds. The U.S., while publicly saying that the American organization is "fully independent" and works as its "U.S. partner." Binance moved approximately $400 million from the account at California-based Silvergate Bank to Merit Peak between January and March of 2021, according to Trade Algo.

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Binance.US executives were worried by the withdrawals from the Silvergate account to Merit Peak since the transactions were taking place without their knowledge, according to corporate texts obtained by Trade Algo. The global Binance exchange is not permitted to operate in the United States, and authorities are worried that some market makers have gotten unreported preferential treatment from crypto exchanges that may disadvantage clients. The operations of crypto platforms' market makers have received regulatory and political interest following the collapse of the major exchange FTX in November. 

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In December, the U.S. Securities and Exchange Commission accused FTX founder Sam Bankman-Fried of offering "special rights" to his trading business Alameda Research, which allowed him to siphon off billions of dollars in client funds. Bankman-Fried entered a not-guilty plea.

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A succession of large crypto firms filing for bankruptcy in 2022 has also prompted calls from legislators for greater transparency on how authorities evaluate relationships between U.S. banks and the cryptocurrency industry. Elizabeth Warren and Tina Smith wrote to key financial regulators, including Federal Reserve Chair Jerome Powell, in December to inquire about their assessment of the dangers to banks and the banking system posed by exposure to cryptocurrencies. The letter mentioned Silvergate Capital Corporation as one of the institutions that "heavily rely on its cryptocurrency consumers."

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Zhao has not explicitly responded to the allegation, but he tweeted "Remember 4" on Friday, linking to a prior post in which he outlined his "Dos and Don'ts" for 2023. Avoid FUD, fake news, and assaults" was the fourth item on the list, employing an abbreviation for "fear, uncertainty, and doubt" commonly used in crypto concerning unfavorable news. Patrick Hillmann, the chief strategy officer of Binance, told to Trade Algo on Wednesday that the business anticipated paying penalties to end U.S. probes. 

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Hillman stated that Binance was created by software engineers who were inexperienced with laws and regulations regarding bribery and corruption, money laundering, and economic sanctions. However, the early "gaps" in its regulatory compliance have been remedied. Hillmann told Trade Algo, "It's a significant load." We simply wish to put it behind us.

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A representative for the global cryptocurrency exchange Binance, which did not answer Trade Algo queries for Thursday's article, told the crypto news source CoinDesk that the transactions were "a Binance.US problem." Yet, U.S. Senator Roger Marshall told Trade Algo, "There is something suspicious going on here that fails the smell test." Congress needs answers, and Binance.US and Silvergate must provide them." In recent years, the Binance brand has been exposed to regulatory examination in several countries, including the United Kingdom and Japan. The disclosures may have a substantial influence on the brand's trust.

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