Cryptocurrency exchange Binance is in crisis following news that it had secret access to a bank account of its independent US arm, and transferred large sums from the account to trading firm Merit Peak Ltd.

According to Reuters, the US partner of global cryptocurrency exchange Binance has confirmed that a trading firm run by Binance CEO Changpeng Zhao is acting as a market maker on its platform.

Binance US said, in a tweet in response to the Reuters report: While a market maker called Merit Peak was operating on the Binance US platform, it ceased all activity on the platform in 2021. It did not say when the activity ceased in 2021, nor did it comment on the matter. Zhao's role in the trading company.

The US company wrote to Binance: There have been many attempts to draw parallels between US Binance and fraudulent exchanges that went bankrupt. But there is no comparison.

The tweet added: Our leadership team consists of former employees of the Department of Justice, the Securities and Exchange Commission, and the FBI, who are committed to operating a secure platform that complies with US laws and regulations.

It is noteworthy that the global Binance exchange is not licensed to operate in the United States, but the transfers to Merit Peak, revealed by Reuters, indicate that Binance controlled the financial affairs of Binance US, despite the claims of complete independence of the entity.

Binance transferred more than $400 million from the account at California-based Silvergate Bank to Merritt Peak between January and March 2021.

Before the story was published, Binance US told Reuters that Merit Peak does not trade or provide any kind of services on the Binance US platform. without giving further details.

The letters, reviewed by Reuters, indicated that Binance US executives were concerned about outflows from the Silvergate account to Merit Peak because the transfers were taking place without their knowledge.

The activities of market makers of cryptocurrency platforms — firms that typically buy and sell assets on exchanges to deepen trading volumes — have come under increased scrutiny from US financial regulators since the collapse of the major FTX exchange in November.

Regulators are becoming concerned that some market makers are receiving undisclosed special treatment from cryptocurrency exchanges that could harm customers.

The Securities and Exchange Commission charged FTX founder Sam Bankman Fried in December with granting special privileges to his trading firm Alameda Research, allowing him to withdraw billions of dollars from FTX clients' funds. However, Bankman Fried pleaded not guilty.

The bankruptcies of a string of major crypto companies in 2022 also prompted calls from politicians for more clarity on how regulators assess the ties between US banking and the cryptocurrency sector.

And in December, Sens. Elizabeth Warren and Tina Smith wrote to top financial regulators, including Federal Reserve Chairman Jerome Powell, asking for their assessment of risks to banks and the banking system arising from exposure to cryptocurrency. The letter cited Silvergate Capital Corp. as being among the banks that rely heavily on cryptocurrency clients.

Shares of Silvergate Capital Corp., the parent company of Silvergate Bank, fell sharply after the Reuters report, closing down more than 22%. It has lost nearly 90% of its value since hitting an all-time high in November 2021.