Binance, the renowned cryptocurrency exchange, has swiftly responded to a recent Reuters special report, refuting allegations that it mingled customer funds with company revenue. This move comes in the wake of claims made by unnamed “former insiders” in the report, suggesting that the exchange commingled billions of dollars on a daily basis in accounts held at Silvergate Bank, a collapsed U.S. lender.
Let me explain just how desperate a journalist @Reuters is to publish a negative story. 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. Users were making a…
— Patrick Hillmann (@PRHillmann) May 23, 2023
However, Reuters failed to find evidence supporting the assertion that clients’ funds were lost or misused. The act of commingling, which involves mixing customer and company funds, has been a concern within the crypto industry since the downfall of FTX, a major exchange, last year. As a result, there are fears that this practice may be widespread across the industry.
Binance previously faced similar allegations when a Bloomberg report in January revealed that the exchange had mistakenly stored collateral for certain crypto assets together with customer funds in the same wallet. This practice, as described by Reuters, raises concerns about the lack of internal controls to ensure the clear segregation of customer funds from company revenues. The article also quotes three former U.S. regulators who claim that this commingling makes it difficult to trace customer funds.
Patrick Hillmann, CCO of Binance, took to Twitter to dismiss the Reuters report, labeling it as “weak” and filled with “conspiracy theories.” Although Hillmann did not outright deny the allegations, he criticized the journalist and accused Reuters of being eager to publish negative stories. Hillmann emphasized that Binance maintains separate ledgers for user and corporate funds, refuting any claims of commingling.
Despite Hillmann’s strong response, the exchange did not provide a detailed rebuttal to the specific allegations in the report. Instead, Hillmann referred to Binance’s previous statements on the issue and hinted at publicly revealing the identities of Reuters’ sources, aiming to embarrass the news outlet.
While Binance maintains its stance of denying the commingling claims, this incident underscores the necessity for stronger internal controls within the cryptocurrency industry to ensure the clear separation of customer funds and company revenues.
Compiled by Coinbold