SECURITIES AND EXCHANGE COMMISSION v. BINANCE HOLDINGS LIMITED et al Document 141: Redacted Document, Attachment 9

District Of Columbia District Court
Case No. 1:23-cv-01599-ABJ-ZMF
Filed October 3, 2023

REDACTED DOCUMENT- Exhibits of Matthew Beville Declaration to[126] ORDER granting Application to Seal Exhibit 1 (Redacted) by BAM MANAGEMENT US HOLDINGS INC., BAM TRADING SERVICES INC.. (Attachments: # (1) Exhibit 2 (Redacted), # (2) Exhibit 3 (Redacted), # (3) Exhibit 4 (Redacted), # (4) Exhibit 5 (Redacted), # (5) Exhibit 6 (Redacted), # (6) Exhibit 7 (Redacted), # (7) Exhibit 8 (Redacted), # (8) Exhibit 9 (Redacted), # (9) Exhibit 10 (Redacted), # (10) Exhibit 11 (Redacted))(McLucas, William)

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Page 1 Declaration of Matthew Beville
Ex. 10
Page 2 EXHIBIT A
Page 3 CONFIDENTIAL

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE
COMMISSION,
)
)
)
Plaintiff,
) Case No.:
v.
) 1:23-cv-01599-ABJ
)
BINANCE HOLDINGS LIMITED, BAM
)
TRADING SERVICES INC., BAM
)
MANAGEMENT US HOLDINGS INC., and )
CHANGPENG ZHAO,
)
)
Defendants.
)
__________________________________)

** CONFIDENTIAL **

REMOTE VIDEOTAPED DEPOSITION OF

TAO ZHANG

AUGUST 31,
Reported by:
BRIDGET LOMBARDOZZI,
CSR, RMR, CRR
Job No. 230831BLO
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14:12:
position, you get a pay raise, and you move
14:12:
offices.
14:13:
A.
Yes.
14:13:
Q.
How, if at all, did your day-to-day
14:13:
responsibilities change at that point in July
14:13:
2021?
14:14:
14:14:
my everyday responsibilities after July, because
14:14:
prior to that I was only responsible for the fiat
A.
Correct?
So there were more responsibilities in
14:14:19
reconciliation.
14:14:28
Binance.US, I -- I began to be more involved in
14:14:30
the cryptocurrency clearing work and also the
14:14:38
overall clearing responsibilities for the platform
14:14:41
Binance.US.
But after July, the transfer to
14:14:56
Q.
When did you move
14:15:03
A.
April 2023.
14:15:12
Q.
So in July 2021, it sounds like your
14:15:14
responsibilities grew substantially.
14:15:20 14:15:21
Did you have any experience with
cryptocurrencies before that point?
14:15:24
MR. LAROCHE:
14:15:24 14:16:08
?
Objection to
form.
A.
I did, but before the change I was only
14:16:16
responsible for some of the clearing work for
14:16:22
cryptocurrencies, not all of them.
But then after
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16:06:
can also provide a total amount for an individual
16:06:
address.
16:06:
with the detailed addresses and then we can
16:06:
manually verify on blockchain to see if those
16:06:
specific addresses have that specific amount.
16:06:
16:06:
16:07:
16:07:
16:07:23
Q.
So if we needed, they could provide us
Who were you referring to when you say
?
A.
I refer to the BHL
when I
was saying
Q.
And that's different from
?
16:07:34
A.
Correct, they are different.
16:07:38
Q.
Who do you deal with on the
16:07:59
A.
I do not know the specific names because
16:08:04 16:08:15
they're -- they are anonymous in
Q.
.
So you have a
from BHL where the individuals are anonymous?
16:08:40
A.
Yes.
16:08:50 16:08:51
MR. LAROCHE:
He's saying --
16:09:00
just -- just to be clear, are you
16:09:02
saying
16:09:04
of people that happens regularly or
16:09:06
just generally
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16:09:
you're talking about?
16:09:
MR. MURPHY:
I mean the
16:09:
16:09:
MR. MENDRO:
Objection to
16:09:
16:09:
form.
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16:16:
16:16:
have in transferring crypto assets from the
16:16:
deposit wallets to the hot wallets?
16:16:
16:16:
16:17:
Q.
So what role does the BHL
MR. LAROCHE:
Objection to
form.
A.
I think they were only doing some fixes
16:17:28
on the technical issues.
16:17:31
played any other roles.
16:17:37
Q.
I don't think they
Well, whatever fix they did on the
16:17:39
technical issue resulted in crypto assets getting
16:17:43
unstuck and transferring from the deposit wallet
16:17:47
to the hot wallet.
16:17:48
MR. LAROCHE:
16:17:52
16:18:25 16:18:28 16:18:53
Objection; lack
of foundation.
16:18:19 16:18:24
Right?
A.
Yes, from the results.
That's -- that's
Q.
And do you know what they did to do
it.
that?
A.
They didn't tell us what they did with
16:18:57
it, so I don't know.
16:19:01
they would tell -- tell us that it's been fixed.
16:19:08
And then when we go to check the deposit address,
It is just that afterwards
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we notice that the transfer has been successful.
16:19:
It has been transferred to the hot wallet from the
16:19:
deposit wallet.
16:19:
16:19:
16:19:
16:19:
blockchain, it is a transfer from the deposit
16:19:
address to a hot wallet.
16:20:
Q.
Oh, so this was a transfer going from
the hot wallet to the deposit wallet?
A.
Q.
From the point of view of the
How should it normally work in this
16:20:14
instance?
16:20:25
above a certain threshold to transfer from the
16:20:29
deposit wallet to the hot wallet?
So what would normally cause the assets
16:20:33
MR. LAROCHE:
16:20:33 16:20:36
Objection to
form.
A.
Normally, as I said, there is a
16:21:25
threshold.
16:21:30
threshold in the deposit address, it automatically
16:21:35
transfers into the hot wallet.
16:21:42
interference needed.
16:21:47 16:21:53
Q.
So when the amount reaches the
There is no
And do you know the software or program
that accomplishes that in the normal instance?
16:22:10
A.
I don't know.
16:22:22
Q.
Can you explain to me how the reports
16:22:24
from the big data team relate to the data that is
16:22:32
on the PNK database?
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16:31:
16:40:
16:40:
16:41:
16:41:
16:41:
is 4:31 p.m.
Off the record.
(Whereupon, a recess is
taken.)
THE VIDEOGRAPHER:
is 4:40 p.m.
The time
Back on the record.
BY MR. MURPHY:
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17:03:
Sigmachain about this?
17:04:
A.
Yes.
17:04:
Q.
Who at Sigmachain did you talk to?
17:04:
A.
Sorry, I don't know how to spell the
17:04:
name.
17:04:
Sigmachain, I also communicated with the manager
17:05:
of the clearing team from the main platform.
17:05:
17:05:
So aside from communicating with
Q.
Sorry.
So just so I understand, there's
a person that you communicated with from
17:05:17
Sigmachain, but you don't know how to spell the
17:05:20
name?
17:05:34 17:05:36 17:05:37 17:05:39 17:06:01 17:06:04
A.
Correct.
the name.
Q.
Do you know roughly how you would say
the name?
A.
I forget.
I need to check the record to
remember that.
17:06:06
Q.
17:06:08
would check?
17:06:20
A.
17:06:23
I for -- I forgot how to spell
And what would the record be that you
Just the name.
I need to see the name
so that I can remember it.
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17:09:28
Q.
And so the last communication you had
17:09:30
about the Sigmachain shortfall was last month I
17:09:36
think you said?
17:09:36
MR. LAROCHE:
17:09:36 17:09:59
Objection to
form.
A.
Yes, there was communication last month.
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18:19:
18:19:
18:19:
well because she's also
18:19:
moment.
18:19:
Q.
18:19:
18:20:
18:20:
18:20:
18:20:15
Trading?
A.
My understanding is for BAM Trading as
Did you get another pay raise to come to
?
A.
It is the portion that I'm getting from
that is the raise.
Q.
So your pay doubled again, if I'm
understanding you correctly?
18:20:18 18:20:38 18:20:41 18:20:43 18:20:45
MR. LAROCHE:
A.
Yeah.
Objection.
If you're talking by comparing
the number, yes.
Q.
So you continued to get whatever pay you
had been getting -- well, sorry.
18:20:51 18:20:54
at this
Before you came to
Strike that.
, you were
getting paid by Boran?
18:21:05
A.
Yes.
18:21:07
Q.
And that salary was roughly double what
18:21:12
you had been being paid when you were back at BHL.
18:21:17
Correct?
18:21:29
A.
Yes.
18:21:29
Q.
And when you moved to
you
18:21:35
continued getting that payment from Boran and
18:21:40
started getting another payment of roughly the
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18:21:
18:22:
A.
Yes.
18:22:
Q.
Is any of this salary paid in crypto?
18:22:
A.
No.
18:22:
Q.
Okay.
18:22:
and BAM Management have financial statements that
18:22:
are audited by a -- an external auditor?
18:22:
18:22:
18:23:24
same amount from BAM Trading?
You understand that BAM Trading
MR. LAROCHE:
Objection to
form.
A.
What I know is that we are being
18:23:28
audited, but I don't know what is -- is this
18:23:34
financial statement referring to.
18:23:49
Q.
When you say that you know that "we are
18:23:53
being audited," you mean that BAM Trading has
18:23:57
hired an auditor that is not part of BAM Trading.
18:24:00
It's part of another auditing firm.
18:24:03 18:24:27 18:24:34 18:24:41 18:24:45
MR. LAROCHE:
A.
Yes.
Right?
Objection.
I know the -- the one I know of is
an external auditing firm.
Q.
You're familiar with the auditing firm
FGMK?
18:24:54
A.
Yes, I -- I do.
18:24:56
Q.
And you've interacted with them as part
18:24:58 18:25:08
of their audit.
A.
Correct?
Yes.
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20:38:
A.
20:38:
it, but this requirement was brought up by the
20:38:
security team and I was just trying to pass the
20:38:
information.
20:39:
Q.
20:39:
20:39:
A.
It's still this Erik.
20:39:
Q.
And did Erik tell you why he wanted
20:39:
From my -- my understanding that's
Who do you mean -- who do you mean by
"the security team"?
another person to be added as an initiator?
20:39:36
A.
20:39:38
backup.
20:39:41
Q.
20:39:44
Yes.
It's also because that I needed a
Was there a specific person you were
asking
20:40:07
A.
to add?
No.
We haven't decided who the person
20:40:13
is.
20:40:20
aware and agrees to adding the person, and then we
20:40:27
intended to discuss who that person is later on.
20:40:33
We needed to inform, make sure that
Q.
is
Do you think it requires
20:40:35
approval to decide who would be the new initiator?
20:40:39
MR. LAROCHE:
20:40:39 20:41:11
form.
A.
I'm not sure if you can say that, but I
20:41:14
know that it's only
20:41:20
initiator.
20:41:24
Objection to
Q.
who can add a new
And apologies if you've already said
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20:41:
this, but do you know if
20:41:
shardholders?
20:41:
A.
I don't know.
20:41:
Q.
Do you have any sense of what other
20:41:
capabilities
20:41:
TSS protocol?
20:42:
A.
I don't know.
20:42:
Q.
Do you know if
20:42:
20:42:35
20:43:20
has any other ability
Binance.US platform today?
MR. LAROCHE:
20:42:38
20:43:14
has as the administrator of the
to transfer crypto assets of customers of the
20:42:38
20:43:10
can add additional
Objection to
form; lack of foundation.
A.
I don't think that
has the
authority to transfer the assets of the customers.
Q.
So just to be clear, I'll -- I'll just
20:43:23
ask it again to address any objection in the
20:43:25
question.
20:43:27
Do you believe that
has any
20:43:30
ability to transfer any crypto assets of customers
20:43:37
of the .US platform as things stand today?
20:44:18 20:44:22 20:44:28
A.
No, I don't think that
has this
ability.
MR. MURPHY:
Okay, Mr. Zhang.
20:44:29
I think that's all I have for today.
20:44:32
I want to thank you.
I know it's an
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