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Binance.US accused of non-cooperation in SEC investigation

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The SEC raises concerns over Binance.US’s response to its investigation, citing limited document production among others.

Binance.US accused of non-cooperation in SEC investigation

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  • These latest allegations from the SEC added to the series of challenges faced by Binance.US.
  • Binance.US had not provided an official response to these allegations.

The United States Securities and Exchange Commission [SEC] has raised concerns over the lack of cooperation from crypto exchange Binance.US in its ongoing investigation. These allegations were detailed in a court filing dated 14 September.

According to the SEC’s court filing, Binance.US’s holding company, BAM, has provided only a meager 220 documents during the discovery process. What’s more, a significant portion of these documents, submitted under the Consent Order, have been described as,

“Unintelligible screenshots and documents without dates or signatures.”

This limited and questionable document production has raised eyebrows within the SEC.

In addition to the document production issues, BAM has been accused of refusing to make essential witnesses available for deposition. Instead, they have agreed to just four depositions of witnesses, chosen unilaterally by BAM itself.

This approach did not sit well with the SEC as well.

Allegations of transparency issues amid regulatory scrutiny

The SEC further noted that BAM responded to requests for relevant communications with blanket objections. Moreover, they have refused to produce documents typically kept in the ordinary course of business, asserting that such documents do not exist.

Interestingly, the SEC later obtained some of these disputed documents from alternative sources.

Another significant issue highlighted in the court filing revolves around BAM’s use of Ceffu, a wallet custody software associated with global entity Binance Holdings Ltd. The SEC expressed concerns regarding inconsistent statements made by BAM concerning Ceffu’s role and Binance’s involvement in wallet and customer funds management.

Initially, BAM claimed Ceffu as its wallet custody software and services provider, but later stated that Binance fulfilled this role. This raised questions about whether Binance.US may have violated a prior agreement aimed at preventing the diversion of funds abroad.

The SEC initiated legal action against Binance [BNB] on 5 June, bringing forth 13 charges against the crypto exchange. These charges encompassed unregistered securities offerings, specific products like Simple Earn and BNB Vault, as well as the staking program.

The SEC contended that Binance.com, Binance.US, and BAM Trading should have registered as clearing agencies, broker-dealers, and exchanges, respectively. The unregistered offer and sale of Binance.US’ staking-as-a-service program additionally necessitated BAM Trading’s registration as a broker-dealer.

These latest allegations from the SEC added to the series of challenges faced by Binance.US. Its CEO, Brian Shorder, was the latest high-profile departure from the firm this year. Following Shorder’s exit, the head of legal and the chief risk officer also resigned within a matter of days.

This instability within the exchange’s leadership raises concerns about its ability to navigate the regulatory landscape effectively.

At the time of reporting, Binance.US had not provided an official response to these allegations by the SEC.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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