5 ms·

The point is that hand-wavey “market making” does not satisfy any need for a credible explanation. The “explanation” given by Li, to the CEO of the exchange is

The point is that hand-wavey “market making” does not satisfy any need for a credible explanation. The “explanation” given by Li, to the CEO of the exchange is essentially, a complete lie. “Merit Peak” is not a vendor… it’s the CEO of Binance global. 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.

LatteLazy 4y ago
Your comment has the same issue as the article: lack of actual proof. 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"
- phphphphp 4y ago
  You're inventing a standard that doesn't exist, what is "actual proof"? 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.

LatteLazy 4y ago

Your comment has the same issue as the article: lack of actual proof. 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"

phphphphp 4y ago
You're inventing a standard that doesn't exist, what is "actual proof"? 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.