SEC Raises Concerns Over Binance.US Cooperation in Securities Law Probe

The United States Securities and Exchange Commission (SEC) has raised accusations of non-cooperation against Binance.US, the American branch of the global cryptocurrency exchange giant Binance. 

The regulatory body alleges that Binance.US’s staking, clearing, and brokerage services violate federal securities law.

A critical focus of the SEC’s investigation is Binance.US’s utilization of Ceffu, a custody service provided by Binance Holdings Ltd, the international arm of the Binance network. 

U.S. regulators have expressed concerns that this use of Ceffu custody might breach a previous agreement to prevent assets from being moved overseas.

The SEC raised concerns about Binance.US’s handling of the probe, citing limited and inadequate evidence provided by the company’s holding entity, known as BAM, during the discovery process. 

The documents supplied were described as “unintelligible screenshots” lacking essential dates or signatures, triggering questions about potential violations of the earlier consent order.

This order was implemented to ensure that only local U.S. staff have access to customer funds, an important safety measure in the domain of crypto exchanges.

“The limited discovery BAM has provided to date raises questions about whether defendants are in violation of the consent order”

Binance.US Counters SEC Allegations

Binance.US refuted the SEC’s allegations, dismissing the regulator’s concerns over Ceffu as an exaggeration. 

In a filing dated September 12, the cryptocurrency exchange labeled the SEC’s demand for additional documents as a “futile fishing expedition.”

The exchange argued that simply providing the Ceffu software for wallet creation does not imply that its international arm has custody or access to customer funds. 

Amid these regulatory challenges, Binance.US recently announced a significant reduction in its workforce, bidding farewell to one-third of its employees, including its Chief Executive Officer Brian Shroder.

JUST IN: 🇺🇸 Binance US chief risk officer & head of legal resigns.

— Coinwaft (@coinwaft) September 14, 2023

BREAKING: Binance 🇺🇲 US CEO resigns.

— Coinwaft (@coinwaft) September 13, 2023

The SEC had previously filed a lawsuit against Binance on June 5, pressing 13 charges against the crypto exchange, ranging from unregistered securities offerings to alleged violations of securities law through its staking program. 

These charges extended to Binance.com, Binance.US, and BAM Trading, suggesting that they should have registered as clearing agencies, broker-dealers, and exchanges, respectively.

The recent accusations by the SEC against Binance.US come amid an internal crisis at the exchange. 

The departure of the Binance.US CEO and other key executives further heightens the scrutiny surrounding the exchange.

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