SEC Demands Inspection of BinanceUS Amid Concerns Over 'Uncertain' Asset Custody
The SEC has pressed a D.C. court to sanction an investigation into BinanceUS, reaffirming their previous allegations that the company had refused to provide requested documents during ongoing legal proceedings.
Because Bitcoin
September 18, 2023
CoinDesk reported that the U.S. Securities and Exchange Commission (SEC) has pressed a D.C. court to sanction an investigation into Binance.US, reaffirming their previous allegations that the company had refused to provide requested documents during ongoing legal proceedings. In June, the watchdog initiated a lawsuit against Binance.US, its global parent company Binance Holdings, and founder Changpeng "CZ" Zhao, accusing them of operating an unlicensed securities exchange.
Monday's filing asserted that the SEC's findings in the case so far underscored "the urgent necessity for an investigation," as the regulator reiterated concerns about Binance's utilization of the custody platform Ceffu. The SEC suspects that Ceffu, rebranded earlier this year from Binance Custody, may also be supporting Binance.US and potentially facilitating the transfer of U.S. customer funds out of the country, contrary to a previous agreement not to do so. This agreement was established because BAM Trading Services, Binance.US' parent company, failed to convince the SEC that it had control over customer assets.
The filing asserted that BAM's own documents and inconsistent accounts undermined their claims of exclusive control over customer assets. The SEC requests a court order compelling BAM to provide documents and communications regarding any entity providing wallet custody software and related services, referring to BAM's evolving explanations concerning Ceffu. Additionally, the regulator accused the company of offering inconsistent information on key facts, slowly producing documents and data, and withholding entire categories of information that could clarify their assertions regarding the custody of customer assets.
The SEC characterized Zhao as an individual who believes he is beyond the jurisdiction of any court and urged the court to dismiss Binance's partial claims of irrelevance, prejudice, and burden. Instead, the SEC requested the court to compel the exchange to provide depositions, communications, and other requested information. Meanwhile, Ceffu maintained that it is a completely independent third-party technology service provider, distinct from Binance, though its connections to the crypto exchange remain somewhat unclear. A hearing on the case is scheduled for later today at 3:00 p.m. EDT.
Resources: