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Reuters accuses Binance of using funds interchangeably to promote BUSD adoption, Binance spokesperson: Allegations are far-fetched

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Reuters accuses Binance of using funds interchangeably to promote BUSD adoption, Binance spokesperson: Allegations are far-fetched

Reuters' almost periodical exposés on Binance have evolved into a regular publication. Reuters has failed to produce any concrete evidence, while Binance's responses have been mere verbal sparring. Unlike last year when Bloomberg Businessweek's Chinese edition was sued by Binance after reporting "Zhao Changpeng's Ponzi scheme," Binance has allowed Reuters to continue their negative coverage. Is there something fishy going on?

Reuters Allegation 1: Binance Mixing User Funds

Reuters cited three sources claiming that Binance mixed user funds with exchange profits in 2020 and 2021, violating U.S. asset segregation regulations.

A source familiar with Binance's internal financial situation stated that this fund amounted to billions of dollars, with fund mixing occurring daily in Silvergate accounts. Reuters reviewed bank documents and found that on February 10, 2021, Binance mixed its own $20 million funds with $15 million received from users.

Reuters did not provide bank document records and mentioned in the report:

Reuters found no evidence of Binance user funds being lost or stolen.

Reuters Allegation 2: Inconsistencies in User Deposit Definitions

Reuters cited former SEC Internet Enforcement Office director John Reed Stark and Binance's previous announcement regarding Silvergate deposits as shown below, indicating:

Deposits made into Silvergate are credited to the trading account in BUSD form, and users can withdraw in USD.

However, this differs from Binance's statement to Reuters. Binance spokesperson Brad Jaffe stated:

These accounts do not accept user deposits; transferring to Silvergate is not depositing funds but buying BUSD, similar to "shopping on Amazon" at any given time without any fund mixing issues.

Former SEC Internet Enforcement Office director John Reed Stark believed that Binance's previous announcement stated that user funds would receive equivalent protection as traditional cash deposits but differed from later statements.

Reuters Allegation 3: Multiple Silvergate Deposit Accounts Belong to CZ Entities

The report cited banking records indicating that Binance's profits flowed into a Silvergate account under Binance Holdings, while user funds flowed into a Silvergate account registered in the Republic of Seychelles named Key Vision Development, owned by Zhao Changpeng.

Reuters also alleged a third Silvergate account belonging to a CZ entity, mixing user funds and Binance revenue, which also belonged to Zhao Changpeng's entity and purchased at least $18 billion BUSD between January 2020 and December 2021.

Reuters did not provide bank records.

Reuters Allegation 4: Mixing User Deposits to Purchase BUSD

Reuters graphics illustrate that whether it's deposits from Binance.US, Binance.com, or users directly purchasing cryptocurrencies on the Binance main site, funds flow through various bank partners to the BUSD issuer PAXOS's trust account, then flow into Binance Holdings to boost BUSD adoption.

Binance Response: Is Reuters' Continuous Mention of CZ Chinese Discrimination?

Binance's Head of Communications Patrick Hillmann tweeted in response to Reuters' report, stating that the entire negative report revolves around the word "deposit" appearing on the website when users buy BUSD, which he deems a weak accusation. He pointed out:

The stories continuously fabricated by Reuters are too far-fetched, hence they must specifically note that "Reuters found no evidence of user funds being lost or stolen," clearly to avoid defamation lawsuits. Furthermore, the report consistently reveals a sense of racial exclusion towards Zhao Changpeng, yet fails to mention that CZ has been a Canadian citizen since the age of 12, which subtly harms.