Binance Responds to Reuters Claims About Mixing User Funds

A Reuters report on Tuesday suggested that Binance – the world’s largest cryptocurrency exchange – comingled billions of dollars worth of customer assets with its corporate revenue in 2020 and 2021, obscuring the whereabouts of their money. 

Binance’s Chief Communications Officer Patrick Hillmann responded by calling the story “weak” and xenophobic but admitted that Binance has had “regulatory shortcomings” in the past.

Reuters’ Claims

The initial Reuters report cited multiple anonymous sources familiar with the matter, one of whom had “direct knowledge of Binance’s group finances.” 

The source claimed that comingling happened “almost daily” in accounts Binance held with Silvergate – a now collapsed crypto-supportive bank that’s been investigated for helping the bankrupt FTX exchange comingle funds with Alameda Research.

Binance told Reuters that none of the funds within its Silvergate accounts were “customer deposits,” but rather funds used to purchase BUSD, Binance’s native dollar-pegged stablecoin. 

However, throughout 2021, the exchange’s website represented dollar transfers to its platform as “deposits” that would be “credited” to their accounts as BUSD, creating potential confusion about regulatory safeguards around those transfers.

Paxos – the issuer behind BUSD – was forced to stop issuing new stablecoin tokens in February after receiving a Wells Notice from US regulators. 

Binance’s Response

In a tweet on Tuesday, Binance’s Hillman asserted that customers were explicitly told on the website that their “deposits” would be used to purchase BUSD.

The comms officer also called out one of Reuters’ qualifying statements that it found “no evidence” Binance clients had lost any money, which he considered a “transparent attempt to protect themselves from a libel suit.”

“We’ve been very public about where the company had regulatory shortcomings in the past, there’s no reason for a respected news outlet like Reuters, to continue making stuff up,” he said.  

Hillman went on to accuse Reuters of implicit “xenophobia” for frequently mentioning CEO Changpeng Zhao’s Chinese ethnicity. The executive has clarified in the past that Binance is not a Chinese company and that he’s been a Canadian citizen since the age of 12.