Binance CEO – CZ Clarifies Misinformation Regarding Binance US Money Movements

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In a series of tweets yesterday, Changpeng ‘CZ’ Zhao, CEO of Binance, clarified about misleading news that has been making rounds in the crypto community. This follows a report that initially claimed Zhao received a $250 million loan from BAM Management U.S. Holdings, a story Zhao quickly denounced as incorrect. This incident highlights the need for investors to do their own due diligence, especially in a fast-moving and complex ecosystem like cryptocurrency.

The Corrected Story 

The corrected story reveals that CZ Zhao made a $250 million loan to BAM Management U.S. Holdings, $183 million of which was then transferred to BAM Trading by Paxos. This move came after the SEC filed a massive lawsuit against Binance, with unsealed court documents revealing questions about these financial transactions.

Paxos Trust Company, a fintech firm partnered with Binance to launch Binance USD (BUSD), ceased minting the stablecoin in February. The SEC had hit them with a Wells Notice, signaling regulatory scrutiny.

The SEC’s lawsuit claims that Binance and Zhao exhibited “blatant disregard” for U.S. securities laws and accuses them of enriching themselves by billions while putting investors at risk. In response, Binance US has repeatedly stated that the SEC’s demands are unreasonable. This long-standing tussle highlights the broader struggle between cryptocurrency exchanges and regulatory bodies as both try to find common ground in a largely undefined legal landscape.

Adding another layer of complexity is Ceffu, an institutional crypto custodian linked to Binance. The SEC believes Ceffu is a channel between Binance US and Binance Holdings. However, CZ Zhao also denied this claim, stating that Binance US “does not use, and has never used Ceffu or Binance Custody.”

The Importance of Due Diligence

This episode serves as a reminder that the cryptocurrency space is rife with misinformation and conflicting reports. Investors should be cautious and perform their own research rather than relying solely on media outlets, which may be susceptible to errors or, at worst, spreading misinformation.