Spotlighting the Operational Dynamics of Binance and BAM Trading, Under CZ

FACTS

V. UNDER ZHAO’S CONTROL, BAM TRADING AND BINANCE PROVIDE EXCHANGE AND CLEARING AGENCY FUNCTIONS TO U.S. CUSTOMERS, AND BAM TRADING ALSO PROVIDES BROKERAGE SERVICES TO U.S. CUSTOMERS

C. BAM Trading and Binance, Under Zhao’s Control, Hold and Control Customers’ Funds and Crypto Assets.

230. To trade on the Binance.US Platform, a user must create a Binance.US account. BAM Trading takes steps to verify that the users meet certain terms and conditions to access the Binance.US Platform, such those related to KYC review and other eligibility criteria.

231. Customers must deposit and maintain sufficient crypto assets or U.S. dollars to cover their orders when placed.

232. To transact in fiat currency, generally customers first establish and deposit funds into an account with Trust Company B, a U.S.-based trust company, which is linked by APIs to the Binance.US Platform. The Binance.US Platform allows for deposits and withdrawals in U.S. dollars via bank transfer (ACH), debit card (deposits only), Apple Pay (debit card only), or wire transfer. Each customer enters into an agreement with Trust Company B for custodial and money transmission services, which authorizes BAM Trading to debit and credit the account directly to settle the fiat leg of any trades involving fiat, pay fees, and process withdrawals.

233. BAM Trading manages customer onboarding and account maintenance for the cash accounts held at Trust Company B, including the deposit and withdrawal of funds deposited for use on the Binance.US Platform. According to the trading rules that govern the Binance.US Platform, BAM Trading “settles the FIAT Currency payments in all Filled Orders on a periodic basis by debiting and crediting the relevant Fiat Currency balances” in accounts at Trust Company B, serving “as a facilitator … by sending deposit, withdrawal, and transfer instructions on behalf of [the customer] in connection with [the customer’s] trading activities.”

234. Binance has also cleared and settled trades on the Binance.US Platform. Until at least July 2021, the Binance Back Office Manager had signatory authority over the Trust Company B account holding the fiat deposits of the platform’s customers. Binance has worked with BAM Trading employees to settle user transactions on the Binance.US Platform involving U.S. dollars.

235. To deposit crypto assets, customers transfer crypto assets to a digital wallet created through Binance software. The crypto assets are then held in omnibus wallets. Binance, with BAM Trading, has facilitated settlement of purchases, sales, and transfers of crypto assets, including crypto asset securities, on the Binance.US Platform by entering debits and credits on an internal accounting ledger utilizing software provided to the Binance.US Platform and maintained by Binance. Customers can initiate a withdrawal by entering a request on the Binance.US Platform to process and approve the transfer of assets to a blockchain address specified by the customer and paying a withdrawal fee.

236. At least through December 2022, Binance provided the digital wallets associated with the Binance.US Platform and held and controlled the crypto assets deposited, held, traded, and/or accrued on the Binance.US Platform. BAM Trading’s role with respect to clearing and settlement was limited to operating Binance-provided software to facilitate clearing and settlement of fiat and crypto asset transactions. Over time, BAM Trading has obtained more control over these clearing and settlement functions. Still, to this day, the AWS that host the software for the BAM Trading customers’ crypto assets are associated with Binance, and, as described above, at least as of June 3, 2023, Binance continues to be involved in the custody and control of Binance.US Platform digital wallets and crypto assets therein.