Cryptocurrency exchange Binance reportedly commingled billions from customer funds with revenue in 2020 and 2021, according to three sources close to the matter.
Billions of dollars from accounts held with US lender Silvergate Bank were commingled on an almost daily basis, one source told Reuters, potentially breaking American financial laws which require customer money to be held separately.
Binance recorded revenues of US$5.5bn and US$20bn in 2020 and 2021 respectively.
The crypto exchange denied the allegations, explaining that customers were not depositing funds, but rather buying dollar-linked BUSD crypto-tokens.
“These accounts were not used to accept user deposits, they were used to facilitate user purchases,” a Binance spokesperson said.
“There was no commingling at any time because these are 100% corporate funds,” they added, likening the transactions to buying products from Amazon.
Former US regulators countered this, however, claiming that by labelling the transactions as deposits rather than purchases Binance was still breaking financial rules.
Sam Bankman-Fried was accused of commingling funds in December after his crypto exchange FTX collapsed, though he plead not guilty to the charges.
The US Securities and Exchange Commission has ramped up actions against the crypto sector since FTX failed in November, with chairman Gary Gensler claiming commingling was common practice among firms in May.
Binance has not received any penalties from the SEC since the regulator formally announced tighter scrutiny of crypto assets in February.