In 2021, Paxos received close to $20 billion from Binance, according to an SEC official who claimed that Binance mixed up money in bank accounts.
Verma claimed in the court document that during 2021, Binance transferred digital assets valued at about $18.5 billion to a foreign affiliate of stablecoin issuer Paxos. There are questions about the security and integrity of the assets because it has been alleged that the monies were mixed with client funds.
Verma went on to say that various accounts at Silvergate and Signature Banks were under the control of Binance and its CEO, Changpeng Zhao. These accounts allegedly served as the conduit for a number of transactions involving Zhao-owned businesses.
The SEC’s announcement is a part of a case it is currently pursuing against Binance, the cryptocurrency exchange, in which it claims that Binance has broken the law and engaged in illegal activity.
The declaration alleges that Binance.US, under the name BAM Trading, and several other Binance-related accounts sent millions of dollars from accounts at Silvergate Bank to a trading firm called Merit Peak Ltd.
Nearly $20 billion sent to Paxos’ foreign affiliate
Before the closure of the account, Verma stated that “millions of dollars from Binance-related accounts were commingled in Merit Peak’s accounts” and was later transferred to a foreign affiliate of the stablecoin issuer, Paxos. The official said:
“For example, in 2021, funds from Key Vision ($11.05 billion), Prime Trust ($1.1 billion) (through BAM Trading) and Bifinity UAB ($6.3 billion) (through Binance Holdings Limited) were transferred to Merit Peak and Merit Peak transferred all of that money as part of its transfers of almost $20 billion to a foreign affiliate of Paxos in 2021.”
Merit Peak got $22 billion from numerous Binance-related accounts between 2019 and 2021, including $1.2 billion from Binance US, according to a closer examination of the accounts’ activity during that time. The trading company sent $21.6 billion to this Paxos overseas affiliate during this time.
This declaration corroborates previous reports that stated that Binance had commingled users’ funds in bank accounts at Silvergate Bank. Binance has consistently maintained that the reports were false.
In February, New York regulators ordered the stablecoin issuer to stop other mints of BUSD. Binance and Paxos have also rejected the SEC’s classification of BUSD as a security.