So after the first CEO tried to get some independence, Changpeng Zhao replaced her with CEO B.
BAM CEO B tried to implement plans to migrate those functions and control ofthe crypto assets from Binance to BAM Trading and into the United States, but Zhao quickly overruled him, causing BAM CEO B to resign approximately three months into his tenure.
Okay!
So while the BAM CEO was trying to get some independence from Binance, a “news article” (probably this one!) dropped with details of Project Tai Chi.
As BAM CEO A explained to the Binance CFO shortly after the article was released, BAM Trading employees “lost a lot of trust with the article” and “the entire team feels like they’ve been duped into being a puppet.”
For example, by 2021, at least $145 million was transferred from BAM Trading to a Sigma Chain account, and another $45 million of funds were transferred from BAM Trading’s Trust Company B account to the Sigma Chain account. From this account,Sigma Chain spent $11 million to purchase a yacht.
So Sigma Chain was a market maker on Binance.US because it was Binance’s “own,” the complaint claims Zhao said. Merit Peak was also a market maker controlled by Zhao. “Sigma Chain’s and Merit Peak’s activity on the Binance.US Platform, and their undisclosed relationship with Zhao and Binance, have involved and continue to present conflicts between Zhao’s financial interests and those of Binance.US Platform’s customers,” the complaint says.
Also, one of the CEOs of BAM Trading didn’t like it:
“To the extent that these two liquidity providers were significant sources of liquidity, meaning that our customers couldn’t, you know, clear orders without the presence of those makers on our platform, I thought that was a real problem. It suggested that the company was, in fact, heavily dependent on CZ, not just as a control person but also as an economic counterparty and that is problematic, so I thought we needed to look into deplatforming them.”
“BAM Trading did not even implement a formal policy concerning its crypto assets custody and operations until May 15, 2023.” Today is June 5, 2023. For the record. FYI.
This is from the third letter an audit firm sent BAM Trading about its various deficiencies. I am sorry I am losing it how on earth did this go on so long.
In addition to controlling BAM Trading bank accounts that held customer funds,at least through December 2022, Binance was the designated custodian for crypto assets deposited, held, traded, and/or accrued on the Binance.US Platform, as expressly recognized in the SLAs. Internal communications indicate that BAM Trading and Binance understood that “.com is the custodian .us uses” and “CZ control[s] the wallet.”
Guys I do not love the banking system but I definitely love it better than whatever the fuck this is.
ohhhh my goddddd
Similarly, in December 2020, Binance transferred $17 million from BAM Trading’s bank accounts to Merit Peak. After learning of the transfer, BAM CEO A asked Binance employees about the transaction and eventually learned that the transfer related to Merit Peak’s trading on the Binance.US Platform. BAM CEO A responded, “thanks – helpful. Just had to get explanation anytime someone breaking our limits with massive withdraw[als] I have to ask – where you get that kind of money? And where is it going? . . . haha [I’m] on a wild goose chase to make sure we have knowledge of where $17M is moving around.”
Hahahahaha and people still have money on Binance ohhhhh my godddddd
Binance’s finance team could make transfers without BAM Trading’s knowledge, the complaint claims. At one point, the BAM CEO had to go ask what was up:
For example, in June 2020, when Trust Company B alerted BAM CEO A that BAM Trading’s internal transfers had increased from approximately $10 million per day to $1.5 billion per day, BAM CEO A had no knowledge of such transfers, was unable to verify them because she lacked appropriate account access, and, as a result, had to ask Binance (a purportedly separate and 43 distinct company) about the transfer of billions of dollars in BAM Trading’s own account.
That’s right, there are two of them testifying under oath to the SEC:
As BAM CEO A testified, there was “significant opacity” with respect to the Binance.US Platform’s trading data, and she “did not get answers from CZ on why or how or what we would need to do to be able to bring the data over” to the United States. She “wanted custody of the data and ability to interact with the raw data in real-time, as to my directions, not waiting on someone else’s approvals,” but she never received it.
Nor did the situation change when BAM CEO A’s successor (“BAM CEO B”) assumed the role in May 2021. BAM CEO B testified to SEC staff that the “level of ... connection” between Binance and BAM Trading was a “problem” and that he had concluded that BAM Trading “need[ed] to migrate the technology to full [BAM Trading] control.”