In a recent development, the US Securities and Exchange Commission (SEC) has sought to freeze the US assets of Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao.
The move comes as the SEC has accused Binance and Zhao of running a “web of deception,” using offshore trading companies such as Merit Peak, which is under Zhao’s control, to mix corporate funds with client assets.
Merit Peak, based in the British Virgin Islands, reportedly received about $11 billion of client assets via a Seychelles-based firm, Key Vision Development Ltd, also controlled by Zhao, according to the SEC filing. This sum forms part of the $22 billion in assets mostly belonging to Binance, and its US affiliate Merit Peak received between 2019 and 2021.
The SEC has raised concerns that this blending of funds puts customers’ assets at risk while allowing Binance to maximize its profits. Zhao’s companies, including Merit Peak and another trading firm called Sigma Chain, allegedly used these funds as they pleased.
Despite these allegations, Binance has reiterated that all user assets across its platforms, including Binance.US, are safe and secure. The company refutes the charge of mixing customer deposits with company funds and claims users were buying Binance’s bespoke dollar-linked crypto token instead of making deposits.
Other allegations in the SEC filing include the transfer of billions of dollars through the United States, some of which have been sent offshore from Zhao-owned accounts in recent months. One such case involves Swipewallet, where a US account sent $1.5 billion in foreign exchange wires offshore in 2022. Binance acquired Swipe, a digital wallet and debit card platform, in 2020.
Read: SEC Intensify Crackdown on Crypto Industry: Lawsuits Against Coinbase and Binance
Finally, the SEC claims that in the first three months of this year, multiple Binance bank accounts wired over $162 million offshore to a foreign account owned by a close associate of Zhao’s, Guangying Chen.
The SEC alleges that funds were also sent from Sigma Chain to Chen. Binance, however, has not responded to requests for comment on these alleged transfers.
 has accused Binance and its CEO, Changpeng Zhao, of running a 'web of deception' and has sought to freeze the company's US assets. The accusations involve blending of corporate and client funds, putting customer assets at risk){kind=link}