SEC Accuses Binance.US of Obstruction in Crypto Investigation

In a recent court filing dated September 14, the United States Securities and Exchange Commission (SEC) has leveled accusations of non-cooperation against Binance.US in the ongoing investigation surrounding the cryptocurrency exchange.

The SEC's filing underscores a significant issue—Binance.US's holding company, known as BAM, has been less than forthcoming during the discovery process. According to the SEC, BAM has produced a mere 220 documents, many of which fall short in terms of clarity, consisting of inscrutable screenshots and documents bereft of essential dates or signatures.

Furthermore, the SEC asserts that BAM has been reluctant to provide crucial witnesses for deposition, consenting to only four depositions of individuals it has unilaterally deemed appropriate. The agency expresses its concern, 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."

In addition to these concerns, the SEC has raised eyebrows over Binance.US's utilization of Ceffu, wallet custody software provided by the global entity Binance Holdings Ltd. The SEC has noted inconsistencies in BAM's statements regarding the roles of Ceffu and Binance in wallet and customer funds management.

Notably, BAM initially asserted that Ceffu served as BAM's wallet custody software and services provider. However, BAM later shifted its stance, claiming that Binance fulfilled the role of BAM's wallet custody software provider. The regulatory body has expressed apprehension that Binance.US's use of Ceffu may contravene a previous agreement aimed at preventing the diversion of funds overseas.

This development unfolds in the wake of the SEC's lawsuit against Binance, filed on June 5. The SEC has leveled 13 charges against the cryptocurrency exchange, encompassing allegations of unregistered securities offerings, the Simple Earn and BNB Vault products, and its staking program. The SEC contends 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's staking-as-a-service program necessitated BAM Trading's registration as a broker-dealer.

These recent accusations by the SEC against Binance.US occur amidst an internal crisis within the exchange. CEO Brian Shorder of Binance.US has joined a growing list of top Binance executives departing the firm this year, alongside the resignations of the head of legal and the exchange's chief risk officer, all within a matter of days.