April 19, 2024
SEC alleges non-cooperation by Binance.US
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SEC Files Allegations of Non-Cooperation Against Binance.US in Ongoing Investigation

The United States Securities and Exchange Commission (SEC) has filed allegations of non-cooperation against Binance.US in the ongoing investigation of the cryptocurrency exchange, as indicated in a court filing dated September 14.

In its court filing, the SEC highlighted that Binance.US’s parent company, BAM, has only produced 220 documents during the discovery process. Many of these documents, submitted under the consent order, are described as unintelligible screenshots and documents lacking dates or signatures.

Furthermore, the SEC expressed dissatisfaction with BAM’s refusal to provide crucial witnesses for deposition. Instead, BAM consented to only four depositions of witnesses it independently deemed suitable, stating: “It has responded to requests for relevant communications with blanket objections and has refused to produce documents kept in the ordinary course of its business, claiming those documents do not exist, only for the SEC to later receive such documents from other sources.”

The SEC also voiced concerns regarding Binance.US’s utilization of Ceffu, wallet custody software supplied by global entity Binance Holdings Ltd. The SEC observed inconsistencies in BAM’s statements regarding Ceffu’s and Binance’s roles in wallet and customer fund management. Initially, BAM claimed that Ceffu served as BAM’s wallet custody software and service provider, but later asserted that Binance fulfilled this role. Regulators expressed apprehension that Binance.US’s use of Ceffu may breach a previous agreement aimed at preventing the diversion of funds abroad.

On June 5, the SEC initiated a lawsuit against Binance, lodging 13 charges against the cryptocurrency exchange, including unregistered securities offerings, the Simple Earn and BNB Vault products, and its staking program. The SEC contended that Binance.com, Binance.US, and BAM Trading should have registered as clearing agencies, broker-dealers, and exchanges, respectively. Additionally, the unregistered offer and sale of Binance.US’s staking-as-a-service program necessitated BAM Trading’s registration as a broker-dealer.

These recent accusations by the SEC against Binance US coincided with an internal crisis at the exchange. The departure of Binance.US CEO Brian Shorder adds to the list of high-ranking Binance executives who have left the firm this year, following the resignations of the head of legal and the chief risk officer at the exchange within days. Binance.US has not yet provided comments in response to these developments.

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