Two executives from Binancewhose CEO CZare suspected by the SEC to have supplied from fonds under their control up to 12 billion dollars by drawing on assets from customers of the crypto exchange.
This week, the SEC launched its legal offensive against Binance and its CEO, Changpeng Zhao, aka CZ. Like the CFTC before it, the authority is targeting both the company and the crypto exchange’s boss for alleged wrongdoing.
The procedure and the breaches identified implicitly establish a parallel between Binance and FTX. The bankrupt exchange and its CEO are accused of having embezzling customer funds to finance their investmentsaccording to a new SEC filing.
Merit Peak at the heart of major transfers
Likewise, CZ, but also another manager, Guangying ‘Helina’ Chenare suspected of being the recipients of assets belonging to the platform’s users. For these transfers, a holding company, Key Vision Development Limitedwould have been involved.
Through his intermediary, 12 billion dollars were transferred to Merit Peaka company owned by CZ. The entity is described as “a proprietary trading company with the wealth that [Zhao] has built himself through the digital assets business”.
This is not the first time that Merit Peak’s name has been mentioned. Back in February, Binance had to explain a $400 million transfer between the exchange’s US subsidiary and this CZ-owned fund.
These funds consisted largely of the assets of Binance platform customers, including those of Binance.US platform customers and other sources”, the SEC now claims, which the exchange disputes.
Gary Gensler the Binance advisor turned adversary?
In support of these accusations, the authority claims to have evidenceincluding bank statements, and also a sworn witness, Sachin Verma, the deputy chief accountant of the SEC’s enforcement division.
In addition, based on Merit Peak’s bank records, the SEC claims that the bulk of its funds went to a foreign subsidiary of Paxosuntil recently Binance’s partner in the BUSD issue.
The SEC says it does not know the reason for these interactions. The crypto exchange and its leader refute these accusations. The latter even retaliated by targeting Gary Gensler.
In a letter, the lawyers discredited the chairman of the authority, who in the past had allegedly offered to act as a informal advisor to Binance. As a result, the firm’s lawyers wanted the recusal of Gensler in this case.
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