Crypto giant Binance moved $400M from U.S. partner to firm managed by CEO Zhao
reuters.com
reuters.com
Last time I heard of Catherine Coley, she was nowhere to be found. I assumed her body will never be found as well. Did she appeared anywhere since April 2021?
> Responding to enquiries from this publication, the San Francisco Police Department revealed it has no file relating to the executive, who hasn’t used her social media accounts since abruptly leaving BinanceUS in May 2021.
> "We are unable to locate a police report related to the person to whom you referred," said Public Information Officer Robert Rueca.
[1] https://www.asiamarkets.com/the-curious-case-of-catherine-co...
The last part of that may be a smoking gun. The ending parts of OP hint at why.
Crypto is all super shady but that's how their advocates want it I guess?
[1] https://support.binance.us/hc/en-us/articles/360050532193
(Similar to vietnam as final assembly place for cellphones, to avoid made in china).
So its a party company, out there to keep a eye on the syphoning of funds out of china by the rich.
Former founder "vanished" like so many not party animals.
Otherwise, there is no justice system, so even a billionaire can vannish over night, making all the money in the world worthless. What good is it to be a party official, if you can not garantee that your children and spouse are in safety and better off at least.
[0]: https://2009-2017.state.gov/j/inl/rls/nrcrpt/2016/vol2/25342...
Binance is not crypto, it's a traditional centralized company. This goes for most other shady stuff in the space.
If the transfers came from Binance.US (BAM) and all client money is held by Prime, then it is very unlikely that the transfers were client money.
>"Where are those funds coming from?" she wrote in one message.
>In a response to Coley, seen by Reuters, the Binance executive, Susan Li, did not explain the transfers. Li wrote that Merit Peak was a "vendor that facilitated trading" on Binance.US and also provided loans and capital injections to the American exchange.
So Li DID explain the transfers?! It's not unusual for separate entities to market make, supply liquidity etc for exchanges, especially small, new exchanges like Binance.US in 2020/2021. And they get paid accordingly like any company rendering services.
This is a similar structure to how FTX and Alameda started off. But there is nothing dodgy about that structure per see. It is the same structure that Trad-Fi exchanges use. The issue is when (a) the market maker starts betting and losing money and (b) customer funds are used to bail it out. (a) is the problem and (b) is the criminal solution...
To be clear: I am not saying Binance is 110% above board, solvent, etc. Just that there is zero evidence otherwise here.
Traditional finance is heavily regulated, audited, and insured. We don't even know where Binance's HQ is or even where the CEO is hiding.
I hoped FTX would lead to basic common sense stuff but it hasn't...
I'm guessing you're pro-crypto, but this would be a better position for the opposition.
This threw me.
It seems to be self-regulating, people put money in and can’t get it back out so stop putting money in.
Until the next hype cycle when a new group learns the lesson of “there’s no such thing as a free lunch.”
Such as?
Yes and they already exist. They are the existing financial regulations for everything else. The only difference has been a lack of enforcement.
You do NOT get to turn around now and get bailed out by my tax dollars. You got exactly what you wanted, and everyone told you this is exactly what would happen. Deal with the consequences of ignoring good advice.
Nobody in crypto was investing, they were gambling.
>You do NOT get to turn around now and get bailed out by my tax dollars.
Quite a useless generalization. Self custodied decentralized commodities like bitcoin and centralized corporate created/run crypto securities are vastly different as far as required government involvement is concerned.
The SEC should be more forthcoming in providing clarity to institutions creating securities and centralized services instead of playing a weird gotcha game while maintaining a high level of opaqueness.
Any business committing fraud, violating securities or custody laws in the US should get penalized and the clients have the right to claw back remaining funds regardless of their personal economic views.
The US Gov taking a hands off position — "none of this shit is real, do whatever you want but don't expect us to protect you" — would be an excellent and satisfactory outcome. In practice, they would probably feel compelled to step into extreme cases like FTX where laws were violated immaterial of the jurisdictional status of blockchain assets, which is a good thing.
A firm set of regulatory guidelines, which does not imply a bailout by any means, would also be a good outcome. The worst part of what we have now is that the legal status of this industry in the US is completely opaque, and the constantly changing uncertainty is driving investment in the technology overseas or stifling it all together.
The government is completely failing its mandate with this policy of inaction and indifference. Pick anything!
If the CEO of Binance global is in control of an ostensibly independent third-party “market maker” and he is unilaterally making hundreds of millions of dollars of transfers into one of his exchange subsidiaries that is ostensibly independent, a transfer that even the exchange CEO doesn’t know about, it paints a very worrying picture.
Genuine market making has zero mystery, the CEO of a traditional finance exchange would know where funds are coming from and where they’re going to go. The fact that CZ is the only person who appears to know anything about these funds is a story, especially given the context — CZ should have nothing to do with Binance US market making!
The unilateral control of funds with zero accountability is what allowed SBF to engage in such widespread fraud, so it is fair to consider CZ’s behaviour in the same vein to be a story of note.
How do you know whether Merit Peak provides "Genuine market making" or "hand-wavey market making", and what other than people prejudices is the difference?
Also, the fact the CEO asked, and was told the reason for the payments is evidence she was fine with them. Not that no one told her. This confuses me about both your comment and the article. How do you get from her being told to her not knowing? She asked and was told. That's the same as every payment that has ever been queried by anyone right?
Also, Also, where does this "unilateral control" come from? There doesn't seem to be evidence the payment was not approved by Binance.US, including all the way up to the CEO level.
This article could be dismissed as "CEO doesn't know why payment is happening, is fine with it once she knows"
Starting from the beginning: Binance aren't allowed to operate in the US. So, an independent company was created, which Binance licensed their technology and brand to, and so that company now operates as Binance US. If all is above board, Binance US has autonomous leadership and CZ has zero involvement beyond collecting fees for licensing of the brand and technology.
> Binance.US's chief financial officer, Jasmine Lee, told the Wall Street Journal on Feb. 8 that "the extent of our relationship" with Binance.com is a shared name and a licensing agreement for technology. "We do not transfer our funds back and forth," Lee said.
The article we're discussing alleges that this "independent company" is not, in fact, independent, and evidences this by showing that decisions made about the operation of the company come from Binance.
The first example of this is that the CEO of Binance US is surprised to discover that a transfer of hundreds of millions of dollars is made into the platform, and so she asks for clarity from the finance team, who explain that the transfer came from a "vendor" that "facilitates trading" called "Merit Peak".
So, if all is above board: Binance US has received a transfer from a "vendor" to "facilitate trading" on the platform and the CEO wasn't aware of the specifics but that's fine because it's a vendor and they're doing market making which is a legitimate and valuable component of an exchange. Eventually, it's alleged, that an "unspecified amount" of the "vendor" transfer is sent on to "Key Vision Development".
The article then uses company records to show the following:
1. Merit Peak names CZ as a manager of the company
2. A Binance corporate filing identifies CZ as a director of Key Vision Development
3. The beneficial owner of Binance US is CZ
You're focused on the CEO querying the payment but that's not the crux of the matter. The payments that the CEO did not expect and did not have knowledge of came from... CZ.
The reason I describe it as unilateral control is because:
1. Binance US did not have access to their own banking infrastructure -- someone else controlled it
2. The CEO of Binance US did not know who was directing the financial activities of the company -- couldn't have been instructing
3. The financial activities of the company were coming from a company controlled by CZ -- controlled by Binance
If you choose to take the most charitable view possible of all of the information in the article, I guess you could argue that Binance US had no idea that Binance was using their platform... but even in that most charitable view, it's clear that Binance itself was funnelling money in and out of Binance US.