According to the statements of a senator quoted by Reuters on Feb. 17, the US Congress will launch an investigation into Bitcoin exchange Binance.US for its ties to Merit Peak. Here are the details…
An investigation may be opened for the Bitcoin exchange in the USA
cryptocoin.com As we have also reported, crypto money platforms have been under the spotlight in the USA recently. According to the latest Reuters report, US Senator Roger Marshall said Binance.US is in focus. Claiming that something suspicious is going on about Binance.US, Marshall says Congress needs answers. He states that these answers should be given by Binance.US and Silvergate. On February 16, it was reported that Binance.US sent $400 million from an account at Silvergate Bank to trading firm Merit Peak in 2021. The US needs to operate separately, this relationship represents a potential conflict of interest.
Since that report, Binance.US has publicly announced on Twitter that it has been operating on Merit Peak’s platform, but has “stopped all activity on (Binance.US) in 2021.” While Binance.US made a similar statement privately to Reuters yesterday, it expanded on that statement in today’s public tweet as well. He claimed that only Binance.US employees had access to company bank accounts. He also said that foreign market makers such as Merit Peak should compete fairly and transparently for discounts.
The country scrutinized cryptocurrency platforms
Binance.US also said it does not and will not exchange or lend client funds. The company has moved away from company collapses caused by the mixing of funds, possibly an allusion to the failure of FTX and Alameda Research. According to a February 15 report from the Wall Street Journal, Binance’s global arm has dealt with numerous legal violations and is actually expecting to pay fines to US regulators. However, Binance.US has rarely been the target of such scrutiny outside of a previous and ongoing SEC investigation into Merit Peak.
Binance.US could soon face wider scrutiny if Senator Marshall’s recommendation today is taken up in Congress and becomes more than a private statement. Marshall was previously involved in a congressional investigation into the anti-money laundering crypto law, as well as the relationship between FTX and Silvergate.
Binance’s BUSD crisis continues
Meanwhile, investors withdrew nearly $2.3 billion worth of Binance USD (BUSD) from Binance within four days after the SEC issued a warning to BUSD issuer Paxos. The SEC requested Paxos to cease further production of BUSD on February 13. At the time, Binance was holding just over 14.4 billion BUSD tokens in its reserves. After the SEC intervention, the stock market’s BUSD pool began to shrink rapidly.
Between February 13 and February 17, Bitcoin exchange Binance’s BUSD holdings dropped 16 percent, to nearly 12.1 billion tokens. After the SEC issued a Wells statement to Paxos on Feb. 13, Binance CEO Changpeng Zhao (CZ) responded to the SEC, saying, “Paxos will continue to service the product and manage redemptions.” However, on the same day, Paxos announced that it will stop issuing more BUSD from February 21, 2023.
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