Three U.S. senators want more information from Binance and its U.S. subsidiary after raising questions about the parallels that might exist around the commingling that occurred between the failed FTX exchange and its sister trading firm Alameda Research.
The "assertion that Binance.US is fully independent is eerily similar to claims Sam Bankman-Fried made regarding the distinction between FTX US and FTX – claims that appear to be false,” Sens. Elizabeth Warren, D-Mass., Chris van Hollen, D-Md., and Roger Marshall, R-Kan. wrote in a letter sent to Binance on Wednesday, demanding more information on Binance and Binance.US operations.
The letter cites multiple reports, including a Reuters report that Binance CEO Changpeng "CZ" Zhao authorized the withdrawal of $400 million from a Binance.US account with Silvergate Bank to transfer to an investment fund he runs, raising questions about whether Binance.US is actually an independent entity.
The senators, all members of the Senate Banking Committee that oversees the U.S. financial sector and financial regulators, want "complete copies of all Binance and Binance subsidiary balance sheets from 2017 to the present," as well as "an estimate of the number and percentage of U.S.-based Binance users during every fiscal quarter between 2017 and the present."
They also want "complete copies of all written policies and/or procedures regarding the relationship between Binance and Binance.US," any communication to investors made about that relationship, and more information on Binance and Binance.US regulatory compliance, including anti-money laundering legal compliance.
“Has Mr. Zhao, at any time, directed or suggested to Binance and/or Binance.US employees that the company should eliminate or limit know-your-customer checks or otherwise weaken its anti-money laundering compliance program?”
The three senators also noted reports that "suggest that Mr. Zhao approved a 2018 plan to create a company, then called the ‘Tai Chi entity,’ that would ‘distract regulators with feigned interest in compliance...’” and are seeking information on that plan.
The senators requested a response by March 16.
In a statement, a Binance.US spokesperson said, "We are confident in the strength of our operations, including our BSA/AML practices, broader compliance programs, and policy of maintaining 1:1 reserves and never trading or lending out customer funds."
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