According to a new filing made by the Securities and Exchange Commission (SEC), Binance’s US branch, Binance.US, lost as much as $181 million in 2022, despite receiving $132 million from its parent company BAM Management. The auditor hired by Binance.US, FGMK, attributed the loss to challenging market conditions in the crypto industry. The news of Binance.US’s losses was first reported by the Wall Street Journal on Wednesday. Although Binance.US recorded approximately $150 million in revenue in 2022 due to surging crypto prices and increased investor enthusiasm, the loss occurred during the company’s second operational year. In 2020, Binance.US incurred a loss of nearly $400,000.
Flow of Funds and Other Entities Controlled by Binance CEO Changpeng Zhao
The SEC filings unveiled a flow of funds between Binance.US and various other entities controlled by Binance CEO Changpeng Zhao (CZ), including a transfer of $21.6 billion to Paxos Trust Company, the issuer of Binance’s stablecoin, Binance USD (BUSD). The documents also shed light on CZ’s crypto empire, including numerous foreign entities linked to him and accounts held at the now-defunct Signature Bank. The entities were established in countries such as Canada, the United Arab Emirates (UAE), the Seychelles, Singapore, Lithuania, and Kazakhstan, with only some bearing the word “Binance” as part of their name.
SEC Crackdown on Crypto Industry
The SEC’s lawsuit against Binance is part of a broader crackdown on the crypto industry in the United States. The regulator has also targeted rival exchange Coinbase, highlighting several tokens listed on the platform as being classified as “securities.” Selling and promoting securities that are not registered with the SEC is a violation of US law. The SEC has argued that exchanges that facilitate trading in these tokens are violating the law by not registering as securities exchanges with the regulator.