Stock Markets

Crypto giant Binance controlled ‘independent’ U.S. affiliate’s bank accounts

Published

2 years ago

June 5, 2023

A senior Binance executive was the main operator for five bank accounts belonging to the giant cryptocurrency exchange’s purportedly independent U.S. affiliate, including an account that held American customers’ funds, bank records show.

U.S. lender Silvergate Bank authorized the executive, Guangying Chen, a close associate of Binance CEO Changpeng Zhao, to operate the accounts in 2019 and 2020, according to records from those years. This allowed Chen and her deputies to move funds held in the bank accounts. Employees at the affiliate, Binance.US, had to ask Chen’s team to process payments, even to cover the firm’s payroll, company messages show.

The new findings offer further detail into how Binance exercised tight control over Binance.US, despite both firms maintaining that they have always operated independently. The previously unreported bank records and messages show that Binance’s management over the U.S. business’s finances extended across its bank accounts at Silvergate and detail how this secret access was granted.

Binance.US has denied that Binance ever operated its bank accounts. Its head of legal, Krishna Juvvadi, told Reuters in April that employees of Binance.US’s operator, BAM Trading, had “exclusive control” since its founding in 2019.

In response to questions for this article, however, a Binance.US spokesperson, Christian Hertenstein, said that since the company’s current chief executive, Brian Shroder, took over in late 2021, “no one other than Binance.US officials have had control or access to Binance.US accounts.” Hertenstein did not explain the discrepancy in the time periods given by him and Juvvadi.

Binance and Silvergate, which collapsed in March and is winding down operations, did not respond to requests for comment.

Binance’s U.S. operations are facing ever-closer attention in Washington. By secretly retaining control over Binance.US’s finances, Zhao ensured he could direct the company’s expansion in the American crypto market – one of the world’s biggest – while keeping it apart from his global exchange that was under scrutiny from U.S. regulators.

The U.S. Commodity Futures Trading Commission in March charged Binance and Zhao with willful evasion of commodities laws by “intentionally structuring entities” to avoid U.S. regulations designed to protect investors. Zhao called the civil charges an “incomplete recitation of facts.” The CFTC had no comment for this article.

Reuters has previously reported that a deputy of Chen’s had access to one Binance.US Silvergate account and that the account transferred more than $400 million in 2021 to a trading firm controlled by Zhao. Binance.US has said the trading firm, Merit Peak, was withdrawing its own funds, money that derived from its trading activity on the exchange. Juvvadi said an investigation Binance.US conducted into Reuters’ previous findings found they were “simply not true.”

Reuters also reported on May 23 that Binance commingled its customers’ funds with its corporate revenues in Merit Peak’s Silvergate account, in breach of U.S. financial rules that require client money to be kept separate. Binance denied mixing customer deposits and company funds, saying that users who sent money to the account were not making deposits but rather buying Binance’s bespoke dollar-linked crypto token.

The Binance.US trading platform was launched by its operating firm, BAM Trading, in mid-2019 under chief executive Catherine Coley. Zhao owned BAM Trading through layers of offshore companies, company documents show. But Binance.US said it operated solely as a “US partner” of Binance. Reuters reported last year that, in fact, Zhao created Binance.US as a de-facto subsidiary to draw U.S. regulators’ scrutiny away from the global exchange.

In December 2019, a Binance.US employee told Coley that Silvergate wanted her to sign a banking resolution, a document that defines a firm’s banking relationship, to “make sure it is ok” for Chen to manage Binance.US’s bank accounts, according to messages exchanged between Binance.US employees. The resolution document, reviewed by Reuters and authored by a Silvergate relationship manager, requested that Coley authorize Chen to “open accounts, transact, and otherwise operate” accounts on behalf of BAM Trading. A person familiar with the document said Coley signed it.

Coley left Binance.US in 2021. A lawyer representing her, James McDonald, didn’t respond to requests for comment.

Chen then signed further agreements with Silvergate to act as the “Primary Admin User” for the five bank accounts: a customer deposit account; an account for corporate clients that later sent funds to Merit Peak; and three other accounts, according to bank records dated between December 2019 and January 2020. The agreements said the authorized person could withdraw funds from the accounts or deposit them, and designate others to do so, too.

Coley told colleagues in a message later that year that she and her finance team were not administrators for BAM’s accounts and only had view-access. The arrangement left Binance.US’s chief lacking ultimate control over the company’s own finances. “We cannot change anything” in the Silvergate banking portal, she wrote.

Hertenstein, the Binance.US spokesperson, told Reuters that “since at least 2021, the only ‘Primary Admins’ on active Binance.US accounts have been Binance.US officials.” He said some of the accounts identified by Reuters as being operated by Chen were “institutional client accounts,” without elaborating on their activity.

After Chen gained authorization, her deputy, a Binance executive named Susan Li, took charge of managing the accounts’ transactions, including payments to cover Binance.US’s payroll, company messages show. “Approved from my end,” Li messaged a Binance.US employee after receiving one payroll request.

Chen, known as Heina, retained control over the accounts until at least early 2021, the messages show. The Silvergate documents she signed listed her address as in Shanghai. A Binance.US employee messaged colleagues in May 2020 to say Silvergate “was still waiting for Heina to sign the final paperwork” on a new bank account for the Binance.US exchange’s institutional customers.

Reuters could not determine if Chen or Li moved funds from the Binance.US customer deposit account. Neither Chen nor Li responded to questions from Reuters.

“Customer funds have not been misused or co-mingled,” said Hertenstein at Binance.US.

Coley and her team repeatedly asked Li during 2020 for Binance to grant them control over Binance.US’s own bank accounts, at one point expressing concern about how regulators would view the situation, company messages show. “I think it makes sense BAM has its own login for the regulatory perspective,” a Binance.US finance director wrote to Li in November.

Coley also later expressed worries to Li that the transfers to Merit Peak were taking place without her knowledge, according to messages Reuters previously reported.

Binance.US did not answer questions about Chen’s role, including her control of the accounts or when it may have ended. It is “difficult to speak to each and every detail” because the company’s “management team has turned over completely since the time period in question,” Hertenstein said.

Juvvadi, Binance.US’s head of legal, said the fund flows to Merit Peak were all proper. The internal investigation matched all the transfers to Merit Peak with withdrawals the trading firm made from its own digital asset account on the Binance.US platform, he said. “All the funds belonged to Merit Peak,” he said.

Juvvadi declined to elaborate on Merit Peak’s trading activity or Zhao’s role at the firm.

Stock Markets

14 lessons from 2024 to remember in 2025: BofA

Published

3 hours ago

December 22, 2024

Investing.com — In a recent note, Bank of America outlined 14 key lessons from 2024 that investors should keep in mind as they head into 2025, warning that market momentum and stretched valuations could face headwinds in the year ahead.

While this year resembled the steady gains of 1996-97, rather than the bubble peaks of 1998-99, risks are mounting—from geopolitical tensions and rising debt to market fragility highlighted by the VIX.

BofA points to opportunities in Europe, China, and Japan but cautions that volatility, trade disputes, and macroeconomic uncertainty will shape the next leg of the market cycle.

Below are the 14 lessons that BofA highlighted.

1. 2024 was a strong year for markets, but it might only be the beginning.

2. The market’s performance in 2024 looked more like the steady gains of 1996-97 than the bubble peaks of 1998-99.

3. In a bubble environment, market leadership can persist for longer than investors can afford to stay underweight.

4. However, the combination of strong momentum and high valuations is already too stretched to avoid a potential bust.

5. The has shown that markets remain fragile, and a major shock may be overdue.

6. August 2024 suggests buying market dips and locking in volatility spikes; using smarter strategies like skewed delta positioning may be key for 2025.

7. Rising debt levels and persistent inflation mean bond vigilantes remain the most visible macroeconomic tail risk.

8. Market fragility, faster reactions, and elevated valuations suggest a repeat of the calm volatility seen in 2017 is unlikely.

9. A Trump election victory has reignited concerns around tariffs, with European companies favored by dollar strength potentially becoming the next trade targets.

10. European equities remain cheap and unloved—investors should be cautious about being caught short, as fewer crowded trades mean less volatility pain.

11. China’s outperformance over Japan in 2024 could continue if U.S. interest rates decline.

12. VIX options data indicates that positioning risks in the market have not gone away.

13. Eurozone bank dividends have outperformed the for much of the past year; investors may need to hedge against a different outcome in 2025.

14. The risk of sharp movements in the Japanese yen, driven by volatility, could cause instability for the in 2025.

Stock Markets

Class Action Lawsuit Reminder WOLF: Kessler Topaz Meltzer & Check, LLP Reminds Wolfspeed, Inc. (WOLF) Investors – A Securities Fraud Class Action Lawsuit Has Been Filed

Published

3 hours ago

December 22, 2024

RADNOR, PA. – (NewMediaWire) – December 21, 2024 – The law firm of Kessler Topaz Meltzer & Check, LLP (www.ktmc.com) informs investors that a securities class action lawsuit has been filed against Wolfspeed (NYSE:), Inc. (Wolfspeed) (NYSE: WOLF) on behalf of those who purchased or otherwise acquired Wolfspeed securities between August 16, 2023, and November 6, 2024, inclusive (the Class Period). The lead plaintiff deadline is January 17, 2025.

CONTACT KESSLER TOPAZ MELTZER & CHECK, LLP:

If you suffered Wolfspeed losses, you may CLICK HERE or go to: https://www.ktmc.com/new-cases/wolfspeed-inc?utm_source=PR&utm_medium=link&utm_campaign=wolf&mktm=r

You can also contact attorney Jonathan Naji, Esq. by calling (484) 270-1453 or by email at info@ktmc.com .

DEFENDANTS ALLEGED MISCONDUCT:

The complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Wolfspeeds optimistic claims of potential growth of its Mohawk Valley fabrication facility and general demand for Wolfspeeds 200mm wafers in the electronic vehicle market fell short of reality; and (2) Wolfspeed had overstated demand for its key product and placed undue reliance on purported design wins while the Mohawk Valley facilitys growth had begun to taper before recognizing the $100 million revenue per quarter allegedly achievable with only 20% utilization of the fabrication, let alone the promised $2 billion revenue purportedly achievable by the facility.

Please CLICK HERE to view our video or copy and paste this link into your browser: https://youtu.be/zMLfnSRjg2Y

THE LEAD PLAINTIFF PROCESS:

Wolfspeed investors may, no later than January 17, 2025, seek to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, LLP or other counsel, or may choose to do nothing and remain an absent class member. A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. The lead plaintiff is usually the investor or small group of investors who have the largest financial interest and who are also adequate and typical of the proposed class of investors. The lead plaintiff selects counsel to represent the lead plaintiff and the class and these attorneys, if approved by the court, are lead or class counsel. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.

Kessler Topaz Meltzer & Check, LLP encourages Wolfspeed investors who have suffered significant losses to contact the firm directly to acquire more information.

ABOUT KESSLER TOPAZ MELTZER & CHECK, LLP:

Kessler Topaz Meltzer & Check, LLP prosecutes class actions in state and federal courts throughout the country and around the world. The firm has developed a global reputation for excellence and has recovered billions of dollars for victims of fraud and other corporate misconduct. All of our work is driven by a common goal: to protect investors, consumers, employees and others from fraud, abuse, misconduct and negligence by businesses and fiduciaries. The complaints in this action were not filed by Kessler Topaz Meltzer & Check, LLP. For more information about Kessler Topaz Meltzer & Check, LLP please visit www.ktmc.com .

CONTACT:

Kessler Topaz Meltzer & Check, LLP

Jonathan Naji, Esq.

(484) 270-1453

280 King of Prussia Road

Radnor, PA 19087

info@ktmc.com

May be considered attorney advertising in certain jurisdictions. Past results do not guarantee future outcomes.

View the original release on www.newmediawire.com

Stock Markets

Starbucks workers’ union strikes across US as talks hit impasse

Published

3 hours ago

December 22, 2024

By Savyata Mishra, Gursimran Mehar and Renee Hickman

(Reuters) -Some members of the Starbucks (NASDAQ:) workers’ union that represents more than 10,000 baristas walked off their jobs in multiple U.S. cities on Friday, citing unresolved issues over wages, staffing and schedules.

The five-day strike, which began on Friday and closed Starbucks cafes in Los Angeles, Chicago and Seattle, will expand to Columbus (WA:), Denver, and Pittsburgh through Saturday, the union said in a statement.

This is the latest in a series of labor actions that have picked up pace across service industries following a period when workers at manufacturers in the automotive, aerospace and rail industries won substantial concessions from employers.

At Starbucks, the Workers United union, which represents employees at 525 stores across the U.S., said late on Thursday that walkouts would escalate daily, and could reach “hundreds of stores” nationwide by Christmas Eve.

“It’s estimated that 10 stores out of 10,000 company-operated stores did not open today,” Starbucks said, adding that there was no significant impact to store operations on Friday.

Around 20 people joined a picket line at a Starbucks location on Chicago’s north side, buffeted by snow and wind, but cheering in response to the honking horns of passing cars.

A few confused customers tried to walk into the closed store before strikers began chanting, but union member Shep Searl said the reaction had been mostly positive.

Searl said 100% of the unionized workers at the Starbucks location in Chicago’s Edgewater neighborhood were participating in the strike, and according to the workers, they have been subject to numerous unfair labor practices including write-ups, “captive-audience” meetings and firings.

The union member said they made about $21 an hour and added, “that would have been a great wage in 2013”.

It is an inadequate wage, the baristas said, given inflation and the high cost of living in a large city, especially since they rarely get 40-hour work weeks.

WORKERS SNUB OFFER

Negotiations between the company and Workers United began in April, based on an established framework agreed upon in February, which could also help resolve numerous pending legal disputes.

The company said on Thursday it has held more than nine bargaining sessions with the union since April, and reached more than 30 agreements on “hundreds of topics”, including economic issues.

The Seattle-headquartered firm said it is ready to continue negotiations, claiming the union delegates prematurely ended the bargaining session this week.

The union, however, said in a Facebook (NASDAQ:) post on Friday that Starbucks had yet to present a serious economic proposal with less than two weeks remaining until the year-end contract deadline.

The workers’ group also snubbed an offer of no immediate wage hike and a guarantee of a 1.5% increase in future years.

“Workers United proposals call for an immediate increase in the minimum wage of hourly partners by 64%, and by 77% over the life of a three-year contract. This is not sustainable,” Starbucks said on Friday.

In response to Starbucks’ statement on the proposals, Michelle Eisen, a Starbucks barista and bargaining delegate, said, “Starbucks’ characterization of our proposals is misleading and they know it. We are ready to finalize a framework that includes new investments in baristas in the first year of contracts”.

Separately, the baristas’ union said on Friday that it filed a new labor practice charge against the coffee house, alleging Starbucks “refused to bargain and engaged in bad faith bargaining” over economic issues.

Hundreds of complaints have been filed with the National Labor Relations Board (NLRB), accusing Starbucks of unlawful labor practices such as firing union supporters and closing stores during labor campaigns. Starbucks has denied wrongdoing and said it respects the right of workers to choose whether to unionize.

WORKING ON A TURNAROUND

Last month, the NLRB said that Starbucks broke the law by telling workers at its flagship Seattle cafe that they would lose benefits if they joined a union.

“It’s (the strike) taking place during one of the busiest times of the year for Starbucks, which could magnify its impact while bringing unwanted public scrutiny into the company’s labor practices,” Emarketer analyst Rachel Wolff said.

The coffee chain is working on a turnaround under its newly appointed top boss, Brian Niccol, who aims to restore “coffee house culture” by overhauling cafes and simplifying its menu among other measures.

“Given how much Starbucks is already struggling to win over customers, it can ill afford any negative publicity – or impact to sales – that the strike could bring,” Wolff said.

The Starbucks workers’ strike comes in the same week as Amazon.com (NASDAQ:) workers at seven U.S. facilities walking off the job on Thursday, during the holiday shopping rush.

There were 33 work stoppages in 2023, the most since 2000, though far lower than in past decades, data from the U.S. Bureau of Labor Statistics showed.