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As markets, customers, and industry observers continue to dissect the U.S. Securities and Exchange Commission’s (SEC) extensive lawsuit against cryptocurrency giant Binance and its affiliates, surprising new details are continually coming to light.
Among the unexpected revelations buried within the 136-page complaint is that Binance.US. had a significant relationship with Alameda Research through its over-the-counter trading desk.
This detail, tucked away on page 55, exposes a previously under-the-radar link between two major entities in the cryptocurrency world, adding another layer of intrigue to the legal battle.
The SEC this week makes a single reference to Alameda Research on page 55, stating the firm was often the only counterparty for Binance.US’s OTC trades between May 2020 and February 2022.
While this disclosure does not directly implicate Alameda Research or its CEO, Sam Bankman-Fried, in any wrongdoing in regard to the Binance suit, its inclusion in the complaint against Binance and its affiliate companies is unlikely to be accidental or immaterial.
The inclusion of Alameda Research in the complaint is particularly notable given the firm’s existing legal troubles. Alameda, the sister company of cryptocurrency exchange FTX, has come under scrutiny in recent months. Its CEO, Caroline Ellison, has already pleaded guilty to charges of conspiracy to commit wire fraud and securities fraud, among other offenses. Bankman-Fried is currently awaiting trial.
The SEC document reveals that Binance.US’s OTC Desk saw over $654 million in trades in 2021, serving primarily institutional traders for large volume crypto asset and fiat pair trades. The report also details the involvement of Alameda Research as a frequent counterparty for these trades through the platform’s OTC Desk.
Alameda Research’s inclusion in the SEC’s complaint underscores the extent to which crypto companies and exchanges do business with one another. As authorities worldwide step up their oversight of digital asset markets, the industry is facing increasing pressure to improve compliance with financial regulations.