Court documents: the SEC accuses Binance and Binance.US of redirecting $12B+ in customer assets to entities controlled by co-founder CZ between 2019 and 2021
If you are wilfully violating securities law, I have some advice: do not put … Allyson Versprille / Bloomberg : Elizabeth Warren Says Binance Appears to Have Lied to Lawmakers Wall Street Journal : Binance.US Was Deeply Unprofitable in 2022, Documents Show Varinder Singh / CoinGape : How US SEC And Court To Deliver Legal Papers To Binance And CEO “CZ”? Trista Kelley / DL News : BinanceUS to suspend dollar deposits, Vitalik pledges $100m to Covid relief Financial Times : SEC homes in on secretive trading arms controlled by Binance chief Timmy Shen / Forkast : Bitcoin, Ether rise amid ‘swoon-soar’ trading after SEC lawsuits against Binance, Coinbase Sarah Jansen / crypto.news : Binance.US clarifies CoinDesk claim about user funds and platform security Mike Dalton / CryptoSlate : CZ denies holding firms received $12B of Binance.US user funds Sam Reynolds / CoinDesk : Binance Redirected $12B to Firms Controlled by CEO Changpeng Zhao, SEC Says Fredrik Vold / Cryptonews : Documents Reveal Binance.US Suffered a $181 Million Loss in 2022 Rhodilee Jean Dolor / The Daily Hodl : SEC Seeks To Freeze Binance.US Assets Hours After Filing Lawsuit Against the Crypto Exchange Bloomberg : Binance Money Trail Reveals $70 Billion Flowing Through Silvergate, Signature New York Times : Binance Moved Billions Through Two U.S. Banks, Regulators Say Rohan Goswami / CNBC : Court filings: Binance's lawyers allege SEC Chair Gary Gensler offered to serve as an advisor to the company in March 2019, when he was teaching at MIT Sloan Tweets: @cz_binance : This is simply false. Not sure if it's the journalist or the source. To the best of my knowledge, https://binance.us/ had in total roughly $2 billion in user funds. This number in USD equivalent fluctuates a little as crypto prices change. And declining as users withdraw due... https://twitter.com/... [image] Ed Zitron / @edzitron : Crypto has always been useless, and the valley should've rejected it. Now tech has become synonymous with poorly-allocated capital enriching ghouls rather than creating any kind of value to society, and I'd argue cryptocurrency is partly to blame. https://wheresyoured.at/... [image] Colin Wilhelm / @colinwilhelm : The SEC alleges Binance and BinanceUS redirected over $12B in customer assets to funds controlled by @cz_binance. That's $4B more than SBF's accused of taking out of FTX for Alameda. Most of the funds went to an entity that paid BUSD issuer Paxos. https://www.theblock.co/... Stephen Diehl / @smdiehl : The DOJ is probably now sitting on a mountain of evidence concerning offshore crypto exchanges and criminal activity. It's pretty clear there was a massive coordinated campaign to deceive US lawmakers. And that can't stand. https://www.bloomberg.com/... Ally Versprille / @allyversprille : .@SenWarren and @ChrisVanHollen have asked DOJ to investigate whether Binance made false statements to Congress when it said its global business and US-based business were independent of each other. [image] Bennett Tomlin / @bennetttomlin : lol Binance US had funds at Silicon Valley Bank, Silvergate, and Signature. That's an impressive run. Colin Wilhelm / @colinwilhelm : The SEC has bank records for the companies. They also have a non public report from BinanceUS' auditor from say year saying that it was difficult to tell if BinanceUS has enough collateral. Because the collateral was kept offshore with Binance. Colin Wilhelm / @colinwilhelm : Statement from Paxos spox: https://twitter.com/... [image] Tom Dwan / @tomdwan : I've learned to generally trust federal courts in these spots. They are imperfect, but quite robust and hard to influence, and they deeply institutionally value honesty. Curious what the judge ends up deciding and saying here. Serious accusations from SEC https://twitter.com/... @rezoshm : Def not good if true - basically very similar to what FTX & SBF did. Hopefully this is not true. https://twitter.com/... Steven / @dogetoshi : Not great if true [image] Matthew Goldstein / @mattgoldstein26 : Did Binance find bank enablers in Signature and Silvergate — two failed lenders? story by @flitteronfraud and me https://www.nytimes.com/... Jacob Silverman / @silvermanjacob : CZ was listed as the beneficial owner on the Silvergate bank account for Binance Holdings Limited, which has an address in Grand Cayman. CZ's address is a resort town in Malta. [image] Jacob Silverman / @silvermanjacob : From SEC filings: CZ made Sigma Chain (which he owns) the market maker/wash trader for BinanceUS. Sigma engaged in widespread wash trading. [image]
Context & Ripple Effects
The filing adds asset-flow allegations to the SEC's earlier lawsuit against Binance and Changpeng Zhao, after a prior SEC inquiry examined how Binance described ties between its U.S. arm and founder-linked market makers. The disclosures sharpen the case around whether customer assets and affiliated entities were kept sufficiently separate.
It matters because the SEC also sought to freeze Binance.US assets, while Zhao disputes that his holding companies received the cited user funds. The episode puts the exchange's internal controls and its ability to maintain normal U.S. financial operations under immediate scrutiny.
First-order effects
- Binance, Binance.US and Zhao face a more detailed regulatory case centered on alleged customer-asset transfers; Zhao's denial makes the ownership and destination of those funds a central factual dispute.
- The SEC's asset-freeze request creates immediate operational risk for Binance.US and uncertainty for customers and counterparties even before the court decides whether to grant it.
Second-order effects
- Banks and payment partners have reason to reassess their exposure to Binance.US; related coverage shows the platform later suspended USD deposits amid pressure on its fiat channels.
- The allegations reinforce scrutiny of exchange structures that combine trading, custody and founder-linked counterparties, alongside the SEC's unregistered-exchange case against Bittrex.
Third-order effects
- If regulators sustain this approach, U.S.-facing crypto venues may have to make customer-asset segregation, affiliate disclosures and governance controls more legible to banks, customers and regulators.
- The broader structural pressure is toward fewer opaque, multi-role exchange models in regulated markets, though the eventual impact depends on the court's findings and the SEC case's outcome.
The trend: This is one data point in crypto's legitimacy gap: regulators are testing whether exchange platforms can retain access to mainstream financial infrastructure without clearer separation of customer funds, affiliated trading and corporate control.