Merit Peak, an offshore trading firm controlled by Binance CEO Changpeng Zhao, is in the SEC filing, where it received nearly $11 billion in client assets through a Seychelles-based firm set up to accept client deposits, Reuters claims.
In its 13-point accusation, the SEC claimed that cryptocurrency exchange Binance and Zhao used Merit Peak and Sigma Chain, another Zhao-controlled trading firm, to mix institutional funds with client assets and use the funds "as they wish".
In response to the SEC's lawsuit, Binance said it would strongly defend its platform. "All user assets on Binance and Binance affiliated platforms, including Binance.US, are safe and secure," the statement said on Monday.
Funds received by British Virgin Islands-based Merit Peak between 2019 and 2021 were diverted from Key Vision Development Ltd, also controlled by Zhao, according to Tuesday's SEC filing.
According to the SEC filing filed Tuesday, the $11 billion sent from Key Vision to Merit Peak forms part of the $22 billion assets Merit Peak received between 2019 and 2021, most of which are owned by Binance and its U.S. subsidiary.
Binance did not respond to email inquiries from Reuters regarding the file, and a company spokesperson did not respond to the voicemail.
The SEC's filing on Tuesday stated that between 2019 and 2023, approximately $500 million was transferred to Sigma Chain's US bank accounts, mostly from Binance and BAM Trading, and $15 million came from Key Vision.
*Not investment advice.
