Report: Binance Vets Say Exchange Commingled Funds

Binance took to Twitter Tuesday (May 23) to attack reports that it commingled funds.

Earlier Tuesday, Reuters issued a special report citing unidentified former company “insiders” who said the cryptocurrency exchange mixed customer funds with its own revenue.

The report said these funds “ran into billions of dollars” and that “commingling happened almost daily” in accounts Binance had at Silvergate Bank, a crypto-friendly lender which self-liquidated earlier this year. Reuters said it found no evidence customer funds were taken or lost.

The news outlet also quotes former regulators who say the circumstances described by former employees suggests a lack of internal measures at Binace to segregate funds.

Patrick Hillman, Binance’s communications chief, attacked the story, calling it “weak,” “desperate” and “full of conspiracy theories” in a long post on Twitter.

“The whole base of their story this morning, is that when users purchased BUSD (Paxos) from Binance, they were taken to a transaction page that had the term ‘deposit’ on it,” Hillman wrote. “Users were making a purchase of a Stablecoin that was redeemable by Paxos, which was explicitly stated on the page.”

He added in a later tweet that the company has addressed the issue several times, saying Binance keeps user and company funds on separate ledgers.

The term “commingling” has become a popular and unwelcome word in the crypto sector following last year’s collapse of the FTX exchange.

Court documents filed in March showed what John J. Ray III, who became CEO after the company’s failure, referred to as a “massive shortfall” of “highly commingled assets” at FTX, representing over $8.6 billion in liabilities across all customer wallets and enterprise accounts.

And Binance has been accused been accused of commingling funds before. A January report by Bloomberg News said the company mistakenly kept collateral for tokens in the same wallet as customer assets.

That report said that reserves for about half of the B-Tokens that the crypto platform issues were kept in a wallet that also held assets of customers using its exchange. This went against company guidelines, which are to store the collateral separately. The report also said Binance was aware of the error and said it would transfer the funds to other wallets.