Binance Redirected $12B to Firms Controlled by CEO Changpeng Zhao, SEC Says

The funds were sent to firms controlled by Zhao via an intermediary holding company known as Key Vision Development Limited, the SEC said.

The evidence for these allegations comes via testimony delivered by Sachin Verma, an accountant employed by the SEC, which will be used as part of the regulator’s arguments to request the court to sign a temporary restraining order to freeze assets on Binance.US.

“The SEC has been unable to determine why a Zhao-controlled entity that was purportedly trading on the Binance.US Platform using Zhao’s personal funds would have acted as a ‘pass through’ account for billions of dollars of Binance Platforms customers’ funds,” the court filing reads.

The SEC alleges, via Verma’s forensic analysis of the bank statements of Binance and Zhao’s web of companies, that $12 billion was sent to Zhao and $162 million to a Guangying Chen-controlled company in Singapore.

Chen and Zhao controlled a number of companies with no obvious connection to Binance in their name, the documents show. The SEC says that the majority of the funds sent to Zhao and Chen are now in accounts “offshore.”

Chen is Binance’s back office and financial manager. A recent report said that she controlled accounts belonging to Binance.US, a contradiction of the unit’s supposed independence.

Binance has publicly denied mixing customer deposits and company funds, and has said that Merit Peak is a vehicle for CZ to trade his “self-made wealth.”

The SEC has been investigating Binance.US since at least 2020 and alleges that Binance held custody of its U.S. affiliate’s assets until December 2022, despite assuring regulators and the public they were separate entities.