New Findings Shed Light on Binance's Wrongdoings

According to journalists Angus Berwick and Tom Wilson, they have gained access to the exchange's internal financial documents spanning from 2019 to 2021. Here's what they've deduced:

1. All evidence points to Binance purportedly intermingling clients' funds with its own assets. At the time, cryptocurrencies worth billions of dollars were being stored in shared accounts. An example given is a transaction from February 10, 2021. On this day, Binance reportedly consolidated $20 million from a corporate account and $15 million from an account used to receive client funds. Such practices potentially expose user funds to additional risks associated with the exchange's activities.

2. There appears to be strong evidence suggesting that Changpeng Zhao was personally involved in the consolidation of assets. For instance, he allegedly transferred funds to the account of a company named Key Vision Development, registered in Seychelles – a well-known offshore jurisdiction for cryptocurrencies. Key Vision's accounts, opened at the now defunct Silvergate Bank, were reportedly under CZ's control. Insiders claim this account was used to amass funds from U.S. users, whom Binance was prohibited from servicing. This directly substantiates allegations made by the CFTC against the exchange in March 2023.

3. The exchange's leadership is said to have created an intricate network of subsidiaries to evade tax obligations. At the core of this web was a company called Binance UAB (later renamed Bifinity), established in Lithuania in 2020. The founding documents portrayed the company as a "digital payment provider", without any mention of providing cryptocurrency trading and storage services. According to a financial report, Bifinity's 2021 revenue totaled €680 million. However, roughly €420 million was funneled to an unnamed affiliate, which Reuters investigators identified as Binance Holdings. The investigation speculates the extent of Binance's tax evasion, estimated at around $400 million in unpaid taxes from 2019 to 2021. This pertains to the operations of the exchange's subsidiaries in France, the UAE, and Malta.

Tax evasion and using offshore companies is almost a customary practice for all cryptocurrency companies, hence the investigative report didn't really shock its readers. However, what stood out in this scenario is the revelation that Changpeng Zhao (CZ) was seemingly involved in the same practices he had vehemently accused Sam Bankman-Fried of - mixing company funds with client deposits. This has allegedly been happening nearly daily from 2020 to 2021.

It could still be happening today, but the downfall of FTX has presumably made CZ more cautious. Yet who can be sure? 

Currently, Reuters doesn't have any solid evidence indicating any client funds were lost. Binance's Head of Public Relations, Patrick Hillmann, dismissed the investigation as "1,000 words of conspiracy theories with zero evidence." He even accused the journalists of xenophobia simply for referencing CZ's ethnicity in their article.