SEC accuses Binance.US of not cooperating with investigation

Binance.US has been accused by the Securities and Exchange Commission (SEC) of not cooperating with the investigation into charges that the company’s staking, clearing and brokerage services violated federal securities law, in court filings revealed yesterday.

US regulatory lawmakers are concerned that the exchange’s ties to Ceffu, a custody service used by Binance’s international branches, violates a previous deal intended to stop assets being brought overseas.

According to the filing: “First, this Court should order BAM to conduct a reasonable search for documents regarding Ceffu, the wallet software services BAM uses, and all other Binance affiliates involved in providing such services.

“In particular, BAM has been unable to credibly explain its own relationship with Ceffu, including the extent to which it is owned and controlled by Binance or Zhao. And whether the entity involved is Binance, Ceffu, or another Binance Entity, Defendants’ compliance with the Consent Order is in question because the limited information it has produced to date reveals that BAM remains reliant on Binance for the custody of Customer Assets.”

Binance.US’s holding company, known as BAM, has provided “only approximately 220 documents … many that consist of unintelligible screenshots and documents without dates or signatures,” the SEC said of the evidence-collating process referred to as ‘discovery’.

The document adds: “BAM has unreasonably and unilaterally sought to limit the Consent Order’s expedited discovery provisions, despite its continued failures in making credible assertions about the custody of Customer Assets.

“This Court should reject BAM’s attempts to deny the SEC the discovery necessary to verify the safety and security of those assets, which are issues that lie at the heart of the Consent Order.”

Earlier this week in a filing on 12 September, Binance.US said the “SEC’s purported concerns about Ceffu are much ado about nothing,” and added that its cries for more paperwork are a “futile fishing expedition”.

It added: “The misleading and mistaken allegations that form the basis of the SEC’s cross-motion to
compel and opposition to BAM’s motion for a protective order highlight the complete disconnect
between the SEC’s overbroad and abusive approach and the limited expedited discovery to which
the SEC agreed in the Consent Order.”