CZ denies holding firms received $12B of Binance.US user funds

Binance CEO Changpeng Zhao on June 8 countered SEC claims and denied that one of his holding firms received $12 billion in U.S. customer funds.

Regarding the supposed $12 billion transfer, Zhao said:

“This is simply false … To the best of my knowledge, Binance.US had in total roughly $2 billion in user funds.”

Zhao said that the value of Binance.US’s user deposits could only have fluctuated slightly due to crypto prices and user withdrawals. He asserted that “all user funds are accounted for, and never left the Binance.US platform” unless users made withdrawals.

Zhao issued his statement in response to a Coindesk article, which in turn cited a court filing as its source. He said he is “not sure if it’s the journalist or the source” that ultimately provided the supposedly incorrect information.

Coindesk also obtained a statement from a Binance representative who said that the funds referenced in the case are “strictly corporate funds and not user assets.”

However, this appears to be a misunderstanding, not an admission to fund transfers. The spokesperson described “accounts” in the relevant SEC court filing. This seemingly refers to Binance Holdings accounts that incidentally held $12 billion from 2020 to 2022.

Court filings support $12B estimate

Other parts of the SEC filing nevertheless appear to back the allegation. One section says that Merit Peak — one of Zhao’s holding companies — received $11 billion of Binance.com user funds via Key Vision Development Limited from 2019 to 2021.

The $12 billion estimate appears to come from the fact that Merit Peak received an additional $1.2 billion from BAM Trading, another Binance.US-related company.

Regardless, the SEC says that Merit Peak comingled the roughly $12 billion of funds with funds from other sources, which in total amounted to $22 billion.

The SEC said:

“The SEC been unable to determine why a Zhao-controlled entity that was purportedly trading on the Binance [sic] using Zhao’s personal funds would have acted as a “pass through” account for billions of dollars of Binance Platforms customers.”

The SEC’s court filing cites a separate document from its own accountant, which provides the same numbers but does not identify the source of those funds as Binance.US customer funds.