ENCOURAGING ANGELS: Binance-A Risk Not Worth Taking-No CFO, No Board, No HQ and Margin Hazards That Peril All You Have Worked For

UPDATE:

This article was orginally posted on Encouraging Angels on 2/11. It was reposted elsewhere, including by www.stevequayle.com. There is a suspicion that some three letter agency people saw it. Here is what happened next just to bring you up to date:
On Sunday, February 12, 2023 the massive withdrawal began. $145 Million in withdrawal of the BUSD token. On Tuesday, February 14, 2023 it was reported that more than $800 million has been exited from Binance in the previous 24 hours following pressure from US regulators.

On Monday, February 13, 2023 CNBC reported …’Crypto firm Paxos to face SEC charges, ordered to stop minting Binance stablecoin’…

By Stan Szymanski

…’Every gambler knows

That the secret to surviving

Is knowing what to throw away

Knowing what to keep’…

(from The Gambler by Kenny Rodgers; words by Don Schlitz)

Binance, the concern that accounts for over half of all trading in the Cryprocurrency market, casts a large shadow in this corner of finance as the largest crypto exchange. That is why the news this week that…

…’According to a Twitter source, the Binance exchange abruptly declared that it would no longer handle USD deposit and withdrawal operations from February 9, 2023 due to the loss of a banking partner.’…(Coincu News 2/6/23)

That banking partner was Signature Bank of New York. Perhaps the reason that Signature Bank broke with Binance had something to do with the lawsuit that the bank was walloped with alleging it aided the activities of FTX prior to the collapse of that enterprise:

…’The lawsuit, filed in the U.S. District Court for the Southern District of New York on Monday by investment and algorithmic trading firm Statistica Capital, alleges that Signature “had actual knowledge of and substantially facilitated the now-infamous FTX fraud.”…(Yahoo  2/7/23)

Another thing to note regarding this halting of USD transfers is that it is  concerning those transactions that happen through US run international SWIFT system where Signature Bank was previously the ‘transfer partner’ with Binance.

So the bank that Binance was using to transact US Dollar trade is the subject of a class action lawsuit about its FTX involvement and is a member of SWIFT (Society for Worldwide Interbank Financial Telecommunication). According to the United States Attorney’s Office Southern District of New York, here are some of the charges levied against FTX CEO Sam Bankman-Fried:

…’conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.’…

What, if any, is the role of Binance in all of this? Will the effect that Binance has be worldwide? Only time will tell but when one looks at some of the other characteristics of this crypto platform, it does not give one a ‘warm, fuzzy feeling’.

Allegedly, Binance has no CFO (Chief Financial Officer). Founder, CEO and self proclaimed value investor Mike Alfred

…’Specifically, Alfred said he had a phone conversation with “a fund manager closely connected to one of the earliest investors in Binance,” who told him that Binance has no single person acting as a CFO, as he detailed in a series of tweets published on December 22.

Instead, he alleges, a group of over 20 employees in the crypto exchange’s Treasury serves as a “decentralized CFO,” as its co-founder and chief executive officer (CEO) Changpeng Zhao “doesn’t want a single centralized CFO.”…(Finbold 12/23/22)

Binance.US does have a CFO, Jasmine Lee, but Binance.US operates only in the United States and is a separate business entity from Binance that has customers in over 100 countries around the world.

Binance did have a CFO (Wei Zhou), but he abruptly left in 2021 and apparently never had access to the company’s full accounts was not replaced:

…’Even Binance’s former chief financial officer, Wei Zhou, did not have access to the company’s full accounts during his three-year tenure, according to two people who worked with him. Zhou, who left last year, did not respond to requests for comment.’…(Reuters 11/19/22)

A company whose finances that Reuters refer to as a ‘Black Box’ and where there is no CFO does not engender confidence, does it? The worlds largest crypto exchange has teetered in the wake of FTX and the news of the last week is not adding any air of stability to its persona.

In 2022, Binance did hire the accounting firm of Mazurs to write a ‘proof of reserves’ report which the public often times construes as a legitimate financial statement. Shortly thereafter, Mazurs suspended all work with crypto clients stating specifically regarding the ‘proof of reserves’ reports:

…“They do not constitute either an assurance or an audit opinion on subject matter. Instead they report limited findings based on the agreed procedures performed on the subject matter at a historical point in time,” the