Changpeng “CZ” Zhao, the CEO and founder of the world’s leading cryptocurrency exchange Binance, has responded to claims that he received a $250 million loan from BAM Management, a firm that operates as Binance.US’ holding company.
Binance CEO’s Response To $250 Million Loan Claims
A report from Decrypt on September 19, 2023, following a court filing related to a lawsuit between Binance and the US Securities and Exchange Commission (SEC), claimed that the CEO had received a $250 million loan from Bam Management US holdings in December last year. However, CZ has denied these claims against him and has shed more light on the report.
The CEO took to X on Wednesday, September 20, 2023, to disagree with the report, saying that they got the direction wrong and that he was the one that loaned Bam management $250 million, not the other way around.
The post read:
The amount of wrong information is just…
They got the direction wrong. I loaned $250 million to BAM a while back, not the other way around. And have not taken it back.”
CZ also shared a screenshot of Decrypt’s report along with his post clarifying that the outlet was wrong. Although there were no other details that were deemed inaccurate by the CEO. However, Changpeng’s statement seems to have cleared the air on the real nature of the alleged transaction.
The report was contingent on the court filing from the US Securities and Exchange Commission (SEC) on questioning Binance.US about a $183 million transfer from Paxos to BAM management in January 2023.
However, Binance US’s legal team asserts that BAM management issued a $250 million convertible note to Zhao in December 2022, and Zhao funded the purchase of this note by sending $183 million worth of BUSD to Paxos in order to convert the BUSD to USD before transferring the funds to BAM management.
US SEC Continues To Hinder The Exchange With Allegations
The US Securities and Exchange Commission (SEC) continues to level allegations against Binance and Binance.US leading to significant effects within the exchange. The SEC has recently filed a lawsuit against Binance.US on mismanagement of customer assets, of which a court hearing has been set for October 12, 2023.
The US SEC has also claimed that it has not been able to extract information from Binance and Binance.US since it filed a lawsuit against the crypto exchange and has filed a motion for the exchange to hand over information to the SEC.
However, one of the judges overseeing the case has said that he was not inclined to allow the inspection at the moment and has denied SEC access to Binance.US software.
The recent controversial report was also contingent on the previous allegations by the SEC against Binance.US that the exchange has used a custody unit linked to the parent company, to potentially expose its clients to foreign entities.
According to the outlet, the SEC was interested in this custody unit referred to as Ceffu, the institutional crypto custodian and partner of the exchange as the regulator believes the crypto custodian was used to move US customer funds out of the country.
Nevertheless, Zhao responded to these claims with a post on X on September 19, 2023, saying that Binance.US has never used the alleged Ceffu or Binance custody. However, several documents disclosed by the SEC counters Zhao’s response, and that the crypto exchange had licensed custody software and support services from Ceffu.