Binance chief strategy officer Patrick Hillman refrained from revealing key financial information about Binance and Binance.US in response to a recent letter from US lawmakers.
Hillman’s 14-page response noted that despite Binance having weak compliance in earlier years, it had invested heavily in personnel to ensure it complied with Know Your Customer and anti-money laundering policies. does.
Binance Executive Reportedly Avoiding Money Matters
Binance has 750 compliance personnel, including regulatory and law enforcement. Hillman said it tapped the former Gemini COO as its compliance officer.
Furthermore, he emphasized that Binance and its American affiliate Binance.US are separate entities, and that the two companies were linked less closely in the media than previously believed.
Earlier this month, three US senators, including Elizabeth Warren of Massachusetts, accused Binance of being a playground for illegal trading.
The letter, co-authored by Roger Van Holland of Maryland and Roger Marshall of Kansas, asked Binance, Binance.US and its CEO Changpeng ‘CZ’ Zhao for the balance sheets of all Binance-affiliated companies since 2017. Anti-Money Laundering Policies and Evidence That Binance CEO Directed Employees to Lower KYC Standards. The senators set a March 16, 2023 deadline for Binance to respond.
An anonymous source told Bloomberg that Binance had separately sent the required financial information to US regulators.
CZ continues to wean the exchange away from FTX
Following the collapse of rival exchange FTX in November 2022, Binance has sought to differentiate itself as an ethical business.
It created a recovery fund to help struggling crypto firms. It is reportedly working on a new proof-of-reserve report that verifies users’ balance changes without revealing their identity.
The exchange also creates so-called B-tokens, which allow it to access customer deposits on a blockchain. These tokens are believed to be backed by the collateral of the actual tokens deposited.
However, recently, Binance acknowledged that collateral is being held in the same wallet as corporate funds, making customer deposits more collateralized. This error prompted the exchange to only issue B-tokens when they were backed by the required collateral.
On March 17, 2023, Changpeng Zhao said that crypto firms should not lend money to customers in order to make money and that they should charge transparent fees for services.
He recently dismissed comparisons to Bahamian exchange FTX in a Forbes article alleging that Binance had loaned customer funds.
FTX bankruptcy reveals $7 billion hole in balance sheet
FTX allegedly combined client and corporate funds to fuel the lavish lifestyles of executives Sam Bankman-Fried, Ryan Salaam and Gary Wang before the exchange filed for bankruptcy last year.
Recent filings in the ongoing FTX bankruptcy case revealed that Bankman-Fried received the largest payout at $2.2 billion. In comparison, former engineering director Nishad Singh got about $587 million, while Wang got about $246 million.
According to the filing, FTX Group had a $6.8 billion balance sheet hole prior to the bankruptcy.
FTX’s US affiliate had approximately $255 million in assets and $342 million in debt. According to the filing, the crypto empire has $900 million in cash and cash equivalents, mostly made up of investments.
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