Nikolas Sargeant
The regulator has requested a U.S. court to reject Binance's objections to its motion. The regulator seeks depositions, an inspection, and communication from the exchange. The regulator describes Binance's objections as "half-hearted."
The SEC Pushes For Further Inspection of Binance.US
The U.S. Securities and Exchange Commission (SEC) is urging a D.C. court to approve an inspection into Binance.US. The SEC has accused the firm of failing to produce documents requested by the regulator in ongoing legal proceedings. The SEC has filed a court document on Monday to emphasize their request.
The watchdog sued Binance.US, Binance Holdings, and founder Changpeng “CZ” Zhao in June. They were accused of running an unlicensed securities exchange. The SEC's findings in the case highlight the need for an inspection. The regulator is concerned about Binance's use of custody platform Ceffu.
The SEC has concerns about Ceffu, which was previously known as Binance Custody and rebranded this year. They suspect that Ceffu might be serving Binance.US and potentially helping with the movement of U.S. customer funds out of the country. This would be a violation of a previous agreement where they agreed not to do so.
Binance.US' holding company BAM Trading Services could not convince the SEC that it had control over its customers' assets. This led to an agreement being entered into. The filing stated that BAM's own documents and inconsistent statements undermined their claim of exclusive control over customer assets. The SEC has filed a request for BAM to provide documents and communications about any company that has provided it with wallet custody software and related services. BAM has given changing explanations for their involvement with Ceffu.
The company was accused of giving inconsistent representations about key facts. They also slow-rolled small productions of documents and information. Additionally, they stonewalled on entire categories of information that could have provided insight into their assertions regarding the custody of customer assets.
The SEC labeled Zhao as someone who believes he is not subject to any court's authority. The SEC is urging the court to deny Binance's weak arguments of insignificance, bias, and inconvenience, and instead enforce the exchange to provide the requested depositions, communications, and other information. Ceffu claims to be a "fully independent third-party technology service provider." It is not officially associated with Binance, but its connection to the crypto exchange is not entirely clear.
